PROBLEM WITH THE IMAGE IN THE PRIOR POST.

For this interested check out this link

http://img.asercentre.org/docs/ASER%202021/ASER%202020%20wave%201%20-%20v2/aser2020wave1report_feb1.pdf

 FROM THE ASER 2020 REPORT

ASER is the Annual Status of Education Report done in India. Not yet read the report as my breath was taken away by this photograph at the top of the report and I just had to post this message of hope.

Hats off to the conscientious teacher and those students. They have so little and are capable of so much.

Children have to go through so much. Here is to hoping the world values all children and works to bridge digital and other divides and ensure that every child has access to high quality pre-school education. 

 Was reading the Draft New Educational Policy for India that was done by a Committee chaired by Dr. K. Kasturirangan.

In it I came across the following. So simple, so rich in meaning that it needs no explanation. Do hope it is followed by many entrepreneurs.

"‘Learning: The Treasure Within’, which the International Commission on Education for the Twenty-first Century chaired by Jacques Delors, submitted to UNESCO in 1996. The Report argued that education throughout life was based on four pillars: i) Learning to know - acquiring a body of knowledge and learning how to learn, so as to benefit from the opportunities education provides throughout life; ii) Learning to do - acquiring not only an occupational skill but also the competence to deal with many situations and work in teams, and a package of skills that enables one to deal with the various challenges of working life; iii) Learning to live together - developing an understanding of other people and an appreciation of interdependence in a spirit of respect for the values of pluralism, mutual understanding and peace; and iv) Learning to be - developing one’s personality and being able to act with autonomy, judgement and personal responsibility, while ensuring that education does not disregard any aspect of the potential of a person: memory, reasoning, aesthetic sense, physical capacities and communication skills."

On the importance of balanced view points

We all know that it is easy to be taken in by a good story. That the same facts are presented one way by one group and another by a different group.
It is useful to, if possible, see a different line of thinking as well.
For example I have long argued that Donald Trump is helping the rich get richer and is deceiving the poorer folks - and those folks are likely to get really upset when they find out they were taken for idiots.
Have a good read of this story. Some useful information here in my opinion.
Worth considering.

The Real State of the Union, in Charts
It’s not pretty. But there is one big reason for hope.
By David Leonhardt
Opinion Columnist

https://nyti.ms/2UMifKf

Not specific to Entrepreneurship - but FOOD for thought!

Please do go through this report. Each one playing their part will help us all.

https://eatforum.org/content/uploads/2019/01/EAT-Lancet_Commission_Summary_Report.pdf

Vishnu

A wonderful woman

The woman (Babalwa Latsha) in this clip says many things that should hold true for all people but specifically for entrepreneurs and entrepreneurship the way I see it.

https://edition.cnn.com/2019/01/04/sport/south-africa-womens-team-babalwa-latsha-spt-intl/index.html

BOOTSTRAPPING

I always believed that it referred to using as few resources as possible.

Here in this article under the section titled Bootstrapping is an alternate explanation i.e. that Bootstrapping uses a tool to build another, more complex, tool. Way cool, and complementary - in that both meanings should apply.

The article is also about some really important thinkers.

Here is the link.

https://www.wired.com/story/50-years-later-we-still-dont-grasp-the-mother-of-all-demos/?CNDID=42701204&CNDID=42701204&bxid=MjM5NjgxMjQzODg1S0&hasha=b5abeb5ee78f16ff3251c9dabf762cf1&hashb=6cbeee99b9049248612c21f69e8da15fdef39464&mbid=nl_121018_daily_list1_p3&utm_brand=wired&utm_mailing=WIRED%20NL%20121018%20(1)&utm_medium=email&utm_source=nl

Why we should be concerned about Urjit Patel's resignation

Without sounding condescending, only to underscore my point, it should be blindingly obvious that the reason we should be worried is that it points to the people in power trying to remove checks and balances.

If we do not do anything, India will soon be a Fascist state.

While it is Modi and his companions this time, the comment above applies to ANY time!

Here is Raghuraman Rajan making the same point.

https://www.thehindu.com/news/national/all-indians-should-be-concerned-says-raghuram-rajan-on-patels-resignation/article25711571.ece

A red flag article by Bloomberg that is worth sharing

I found this article to be informative .... I am biased though and it is possible I am only looking at aspects that support my views.

Read on ....

https://www.bloomberg.com/graphics/2018-corporate-debt/?srnd=premium-asia

More red flags

Despite the (I think misleading) title of the article, these were reasonable penalties imposed by the government. In previous posts I have argued that there are red flags due to relaxing of banking regulations; and given that banks get fined, but the bankers who cause the fines are not punished, and the profits are worth it, that banks could well simply be budgeting for fines i.e. essentially giving the average tax payer the middle finger. One figure stood out in the article below - penalties "and legal costs and related obligations" of 30 billion USD in 10 years!!! NO numbers on the number of people jailed or penalised!
Disclosure: I worked for JPMC for some 11 years and was laid off by them.

https://www.bloomberg.com/news/articles/2018-10-26/jpmorgan-s-secret-punishment-u-s-halted-its-growth-for-years?fbclid=IwAR1_WLbUZa17iz9WCMs3NioiF4rVhaNyPuRSsp_AoFsL6JT-zD3m4-riN54

Can we survive the next financial crisis?

Believable, and good, article. I was incredulous to start with as the article seems to first note that banks were doing well and went against my sense that big banks continue to be very greedy. As the article progressed my views were reaffirmed as it seems that the risk still exists, is bigger, but was simply shifted.

https://www.bloomberg.com/graphics/2018-lehman-anniversary/

Money for nothing and ...

My first thought was this would not work in countries like India, Sri Lankas, Pakistan ... but sharing because I think I may be wrong and some will and that can make a difference. Believe there are already groups in Delhi that help to improve the lives of "ragpickers" as they are sometimes referred to in India.

https://www.bbc.com/news/av/stories-45398184/a-clever-way-to-make-a-living-out-of-rubbish?SThisFB

Are stock buy-backs starving the economy

Those interested in the markets may find the link below interesting. May also explain why the markets do not necessarily reflect the economy and in some ways, the other way too i.e. the markets do broadly reflect the economy. Folks who think I am spouting nonsense, may be right, but I do think that the markets are often divorced from reality (explanations for a market's movements are best found after the fact); and that professional traders make money on volumes and transactions regardless of whether the markets go up or down while the average investor cannot know whether they will have a profit or a loss despite their often inflated opinion of their stock picking ability. I have time and again seen, especially in the case of Alpha types, that if they get something right, they attribute it to their intelligence, and when they are wrong, they keep quiet about it or will find some external factor to blame!

https://www.theatlantic.com/ideas/archive/2018/07/are-stock-buybacks-starving-the-economy/566387/?utm_source=fbb

A video on immigration

Sharing a post I made on F/B in 2016 that has to do with the benefits of immigration.

https://youtu.be/JoHCT2bUjwg


Perhaps you can also check out Gerben's You Tube page.

Demonetisation of the 500 and 1000 rupee notes sucks

Note: I first posted this in Facebook some 5 or so days after the demonetisation was announced in India. I realised it was still in Draft form only when I wanted to publish my article on "An old man ...".

Demonetisation sucks! (a) If as reports suggest, only about 6% of illegal money is in cash in Indian rupee notes, it is a relatively small irritation to the cheaters; (b) the collateral damage to honest or relatively so citizens of a primarily cash based society is huge - at a personal level and macro level (lost gdp when productive time is used to stand in lines at banks); (c) the measures make a very tiny dent in "illegal money" because it will not "catch any big fish" - the big fish would have to be stupid to get caught because they risked 100% of their ill-gotten wealth to save 6% of it, far better to light cigars with the cash that is the 6% (or of course use the 13 ways in the attached article); (d) the best connected cheaters would have probably got insider information and "saved" their 500 and 1000 rupee notes in a number of ways - was there an uptick in stock and real estate transactions in the 2 or 3 months that this hare-brained scheme was being discussed and implemented? How about in the number of new bank accounts, or of the number of accounts that mysteriously suddenly had 2,50,000 rupees in them.
I must admit that I was excited when I first heard about it. Then when I got home and started thinking about it and reading the opinions of others I realised what a costly gimmick this was by the Indian Government. The sad part is that after the first day there seem to be many who do not think it is a gimmick and a fair share of them most likely think that the collateral damage is worth the trouble to get at that illegal money. What is even sadder is that whatever amount is not lost and goes into government coffers (via people suddenly paying years of taxes or levees with cash, or the confiscation of funds) is most likely going to get misappropriated or used very inefficiently!
Once again the common citizen is made to pay for the folly and greed of others.

Article from Huff Post
13 Ways In Which Indians Will Convert Their Black Money Into White Even After Demonetisation
As the poor struggle, black money owners are finding a variety of ways to save their wealth.
HUFFINGTONPOST.IN

Note to self - start blogging again!

An old man nearly made me cry today.

An old man nearly made me cry today.
That said, and before I go on, I would like to make it clear that the following is not about me – it is about him. Here is what happened.
About 6:15pm with the temperature dipping below 20C and darkness settling in I set out for a short walk with my dog, Fred. I was in a hurry, hoping that I could go back and see the last of the cricket action on Day 4 of the 4th test v England at the Wankhede (I like to watch only when India is winning).
When I had walked about 20 meters out of my compound, I saw a person slumped in a sitting position by a lamppost on the pavement across the road. Just then, he slowly stood up, shuffled to about a foot from the edge of the pavement, then without really caring as to what was happening stepped on to the road in front of an oncoming taxi that braked, swerved, missed him and carried on. The man froze. Given that this was on the bend (just outside the entrance to 25, Sha Wan Drive) I thought traffic coming up the hill may not see him in time when he was on my side of the road, so I rushed towards him (thinking he was suicidal) and shepherded him to my side of the road.
I tried to speak to him but could not understand him at all given I did not know his language. He also did not know any Cantonese so the few words that I know in that language were useless. He was dressed in two shirts and a pant and very poorly and wore bare sports shoes. He was calm but obviously exhausted and weak and I noticed that he looked me in the eye when I addressed him or when he tried to speak. I asked if he was Ok and he indicated that he was. I then waited and he entered 25 Sha Wan Drive and then again just stopped in the middle of the entrance road about 4 or 5 meters into the compound. I ran towards him still unsure if he was suicidal. Perhaps it was because it was a Sunday evening there was no one else on the road and this made me desperate because I really wanted to communicate with this man and ask him how I could help.
I escorted him to the corner of the entrance to 25 Sha Wan Drive and tried to ask him again. He put his two palms together and by the side of his head as he tilted it. I took that to mean that he wanted a place to sleep. So I tried to tell him that he could go into 23 Sha Wan Drive (where I live) and thinking I could show him a place in the underground car park where he could sleep at least for a few hours before the guards found him. He indicated “no”. I then showed him a tiny gate (it is near Block 1 of 23 SWD), opened it and stepped in to show him “the secret” entrance. He said “no”.
He also indicated, “thank you”.
That shook me to the core. Here was a guy, who was not drunk, clearly exhausted, possibly starving, but polite and courteous – and there I was, helpless in my ability to comfort him in some way, thinking my dog Fred had a better life than a human, and that I could walk to the comfort of my home in just a few steps while this man had nothing. This caused an angry rage in me and I had to fight back my tears of anger at the situation the old man was in.
I know this sounds like an extreme reaction on my part. Especially considering that I have lived in countries where I have seen extreme poverty and watched on television news the horrors inflicted on people. Perhaps it was anger that had welled up in me because of the injustices that I had seen. Perhaps it was because it was just me, the old man and Fred on the road and that made the situation very personal.
As he walked down the road towards 23 Sha Wan Drive, I waited a bit, then overtook him and went into 23 Sha Wan Drive and waited to see what the old man would do. He just ambled past the entrance and continued down the hill – or so I thought.
Angry now with myself for not doing more for him, I went up to the flat and (with my wife on a business trip and my helper off for the day I was alone) started looking for something that I could give the man. I grabbed a sweater, a jumper, and 3 energy bars and rushed back down with Fred. As I exited the building I saw a helper returning from a day off and asked if she had seen an old man in a white shirt. She said: “yes, he his walking up the hill”. I was sure that had to be wrong and asked again and she was sure and added: “he cannot be far”.
I ran out and sure enough, he was on the other side of the road, not 15 or 20 meters from where I first saw him. I went up to him and stopped him and there was instant recognition (leading me to believe that he had his memory working and was not lost). I offered him the clothes and he pinched his shirt (to indicate he had one) and said “no”!! I then offered him the 3 energy bars – and he took 1. ONE. In that instant I thought of the many that I know, who despite having so much, want more and are greedy or stingy and wondered at this exhausted man who gingerly took just one of the 3 energy bars.
I then reached across and put the other two energy bars into his shirt pocket. I asked him again to please take the sweater and the jumper and he politely refused but pinched his pants (this time the expression indicated he may need pants). Thinking that perhaps he needed a change of pants I indicated he should sit down, pointed to my building, and that I would go and return quickly with something while he waited. He again politely declined and indicated thanks by slightly cupping his right hand and pointing his palm at me while slowly moving it up and down a few times.
I looked around, saw the road was still empty and realised that I may not be able to help the man more. In hindsight I should perhaps have called the police.
If you asked me to pick him out of a line up of elderly Chinese men I would possibly not be able to do it. But I was able to recognise in him a polite and good man, who was dignified and not greedy. I only wish that when his end comes, it comes quickly and painlessly, and that his last memory before his breath leaves him is a happy one.

Spreading the message

A somewhat different post this time ..... perhaps a harbinger of things to come.

1) A quick update - I have returned to Hong Kong. Am not sure of next steps yet but have a few things that will keep me busy till June. Will try and blog now and then (many blog ideas that I have not converted into posts, and some new ones).

2) Been wanting to share photographs of my mobile bill board.
Now you do see a few more of this type of truck in India but it still draws looks. I figured that I ought to use that to my advantage and put up some messages that are important to me.
The messages.
a) Equal rights and dignity to all. The core of the U.N. charter and something that I firmly believe will lead to a better world if taken on as a tenet.
b) Empower Entrepreneurs. This is central to my notion that there is a lot of unnecessary friction in the "system". Entrepreneurs should succeed or fail based on their abilities and not due to the "system".
c) Empower Women. (At least in India) we are missing out on the power of women. Not just in the human capital aspect. Also in the leverage factor - in that (at least in some socio-economic strata) when women are earning the chances that their children will have access to more education and nutritious food is higher than otherwise.
d) "Our soldiers died for us - respect them by being better citizens". There are no doubt folks in India who think I am overly critical of India. I try and explain that we should learn to take warranted criticism - and why it burns me up so much when I see wrong done (because I actually care!). In India, we are not allowed to fly the national flag from vehicles or wear flags etc. because the government believes that it would show disrespect to the many who have laid down their lives for the flag. Yet, we insult those dead in so many other ways.
e) Speaking of flags - designed ones that showed my Indian and Swiss heritage and put them up in a few places.

(Confession. I also had the truck modified a bit. It has a bit of a growl now with a modified exhaust, a power chip that makes driving in hills fun, and four extra shock absorbers to limit the roll on curves. Boys, as they say, will be boys.)

Stay well. Stay true.
Vishnu

On making a pitch

I subscribe to a blog called Venkat's Expressions and came across his post on Pitching. While a good post, given that I have seen a few pitches and hold some views on them I thought I would add to his post (which is here http://carvk.com/2014/01/17/10-factors-for-a-perfect-pitch/).

Overall Venkat's list does indeed capture most of the key aspects of a Pitch. I would be surprised however if folks said all that in 3 minutes never mind in a 1 minute elevator pitch - or if folks could understand it if they did. ;)

You should choose elements from and/or tailor the list for 1 min, 3 min and 10 min pitches.

In my view, the list is missing three key elements - delivery, ability to handle questions, audience.

When I say delivery I mean how you are dressed, body language, enunciation etc. Some steps to take in this regard are first to practice in front of a mirror and then to pitch to friends. Practice does make perfect.

To handle questions well you need to dream up questions (ask people you think are not very smart to ask you questions) and find good answers to them (not-so-smart people should be able to understand them). Not saying investors or clients or potential partners are not smart - just that by working hard at it you will find good, simple, direct answers to important questions ("stupid" people sometimes ask the best questions!).

Audience - pitches are not just to investors but also to potential partners and customers. Tailor your pitch accordingly.

One of my shortest posts so far!

Been meaning to post a longer, more personal blog for a few weeks now. Working up the courage (it will show my vulnerabilities) to do so but will do it so long as I think it may help others in similar situations. That is the wonderful thing about doing things for pure reasons - you do not have the same "I must impress people" concerns, only, whether a message may be of use or not!

Stay well. Stay true.

Vishnu.

The talk I gave as part of Global Entrepreneurship Week (at IIIT-Hyderabad)

Was tasked with speaking about "the things a start-up founder should do" and to speak a bit about mentors and incubation.

Thought I would transcribe and post the hand-written notes of my "speaking points".

Preamble

a) Given that for reasons of brevity (this is going to be a long post anyway) I am not explaining or using the examples I used while speaking, there may be some loss in translation.
b) To set the stage, a significant part was in the form of questions, with prizes for correct answers being the sweets that I love and that I pick up at the Abbey in Piona, Italy.
c) The speaker before me, a board member of TiE Hyderabad, and a much-accomplished man had argued that Entrepreneurship was an art and a science. When I started I used that to make the point that I was going to disagree, that disagreeing had nothing to do with disrespect, and that the point to underline for entrepreneurs was that they had to get used to hearing different views and deciding for themselves.
d) Most of what I spoke about was based on my experience. The only thing that was not, was the part on Incubation.

Ok so lets get to the speaking points.

1) Will ask questions. Sweets for what I think is the right answer.

2) Will speak about universal skills - those that can be applied in any situation.

3) Why is it that a person who does not know theoretical physics cannot talk on theoretical physics to theoretical physicists but a non-entrepreneur can talk about entrepreneurship to entrepreneurs?
Answer: Its an art, not a science.
While I am not an entrepreneur it is true that I have been mentoring them for about a year and have done a fair bit of research on the subject so in a way I was not being entirely honest.
Also make point that entrepreneur (E) needs to be a bag of contradictions. Example have a massive ego while also not having one. Think big and think small.
(As an aside, the earlier speaker had said an E should not have an ego, but I stated that to execute on something that others do not believe can be done, or believe you cannot do, you do need a healthy ego.)

4) 3 statements. Question is who said them? Hint - if you have been watching TV in India you will recognise theme.
a) "Chase your dreams, but make sure you do not take short cuts."
b) "Path may be difficult but don't give up."
c) "Be a nice human being."
Sachin Tendulkar, a much-loved and accomplished Indian cricketer had stated the above in his farewell speech at the Wankhede stadium and had said that this was the advice his father had given him. I thought it particularly appropriate for entrepreneurs.

5) Which one of the 3 quotes is not necessarily good advice?
Answer: the second one. Speak about knowing when to quit and move on.

6) What do most E's need? Money
What do most mentors not have? Time
Time is money. As an E whether selling your product, pitching to investors etc. the Q you have to ask yourself and solve is: "How do I get the money out of that pocket into mine?"
Same approach for mentors. "How do I get them to give me their time?"

7) Situation = you are unfamiliar and scared of dogs (we have many of them "on the loose" in India). Who should adapt, you or the dog?Who should change their behaviour to suit the situation?
If you are clever you will realise that humans, yes it is true (!), are smarter than dogs. Yet we just stay scared and do not try to study dogs and understand what to do. We expect the dogs to change. Not us.
Kind of similar when dealing with investors and mentors. Not to compare them to dogs, the dog example is incidental. Point is it is incumbent on us to state our case so the investors and mentors understand it. The burden is not on them. It is on us.
Real case in point. A friend had (has) a product and lamented the fact that the investors just did not "get it" i.e. they could not see the uses (and resulting value) he could see. My point to him was to break it down into parts they could understand and call the rest as "future development" and introduce it and depending on their reaction, stop there. I told him that in my opinion most of us are driven by egos and have a hard time saying "I do not get it, please explain" and that an investor would more likely than not have the same frailty. Rather than try to understand they are likely to react by finding a reason why the idea will not succeed.  We therefore have to talk in their language. We adapt.

8) Be selective in choosing a mentor and even more selective in choosing an investor.

9) Do not accept mediocrity and more importantly do not accept that "it is the Indian way".
Question: Is your competition in the next 10kms, 100kms or 1000kms?
Answer: it is global. If you do not believe me, the next time you are stationary in traffic observe that an out-of-state economic migrant is selling you goods made in China. Some 20 years ago there were some 600 products on the so-called Reserve list. Today there are about 25. So your competition is global and you cannot compete globally by accepting mediocrity.

10) Social Capital (saw the below on the internet but did not note down source - apologies).
Question. Is a small business nothing but a small version of a big business?
Answer. No. A big business like Dow or J.P. Morgan is not a person. A small business is you. Your value systems and your biases.

11) Question. Which would you rate higher: Jugaad (Indian word that translates into improvisation) or Innovation?
Answer. Innovation. Jugaad is improvisation and has its place but is a band-aid (give example). Innovation is more long-lasting and better-value (give example).

12) Circle of Opportunity. Check out Gary Sinek's TED talk. Why, What, How. Always in that sequence whether you are building or selling your product/service.

13) Question. "I must know how to create an excellent business plan to be a successful entrepreneur." True or False?
False. while a tool that has its uses its link to performance is tenuous at best and to me unproven.
As an aside, it is a good means of evaluating the person who is presenting it. Have wild assumptions in there and you lose credibility instantly.

14) How do you get your first client(s) (in general, approach is product/service, market, and customer type dependent). As an aside, believe I got the first and sixth from some scholarly article, but do not remember which. Apologies to the author!
i) Be credible: before starting your firm (you are likely to sell to folks in your circle); during; and after (i.e. after-sales).
ii) know your offering well
iii) Solve a problem
iv) demonstrate value
v) Social capital - i.e. network, go to where your customers are either online or off.
vi) Find 'leverage customers" the type that will lead you to or influence more customers
vii) Give it for free - careful though .... only if it makes sense

15) INCUBATION
(Source for this section: “On the structure and internal mechanisms of business incubator: A comparative case study” Ali Ahmad. Note: I did a decent amount of research on the subject and found this paper to be particularly good.)

Incubation is primarily relational in nature.
3 key relationships Incubation Manager (IM), Client (C) and Third Party.
Quality of incubation is dependent on "incubation clicks".

Positive incubation clicks
- shared awareness of gaps in knowledge, competencies and resources
- mutual willingness to engage in incubation activities
- recognise that IM can fill gap
- capacity of IM to commit sufficient time to implementing a breadth of activities and achieve the level of intensity needed for impact

Negative incubation clicks
- client's (over) confidence in personal activities
- view that IM is incompetent
- uncertainty as to type of business problems to bring to IM's attention

Ground rules help
- subscribe to community spirit
- adhere to standards of housekeeping
- adhere to standards for conducting business affairs
- consider the incubation centre a true stakeholder (not just a shareholder agreement).

Thank you.

Stay well. Stay true.

How much would you pay to "valuate your idea"

Recently an email request touched a raw nerve, perhaps more than it should have. Reproduced here for you to form your own opinion is the email exchange in its entirety - save for the name and details of the sender.

Notes: 

a) in the discussion below it is taken for granted that "the idea" is a tangible idea that can be commercialized;

b) it should also be noted that I do have high regard for this person - am noting this as some may believe my responses to reflect otherwise;

c) a lakh is 100,000; a crore is 10 million or a 100 lakhs.

The seemingly innocuous request

"Hope you are doing good. From the last 1 year i have traveled a lot and have been to a lot of people with various hats at different levels ( I mean founders who made millions, successful Startup teams, listed to investor talks, met people who have great ideas, etc,.)

And recently i have met an interesting person and made me to think of this -> " How much an entrepreneur would like to spend money to valuate his idea(a Million Dollar idea of an Entrepreneur) from a Real Expert, an expert who has great experience in Building Business". I would love to listen to your opinion

Please answer thinking of your own scenario."

My opinionated response (he was asking for an opinion!)

I think that the question you asked is a wrong question. Presumably the question is deemed relevant because an entrepreneur does not know if the investor is valuing the company fairly. 

No one knows the future and no one can therefore come up with a correct value - except by complete chance and that too only time can tell!

The better question would be: "how much would you pay someone to help you understand the parameters that will determine the value of the company".

An even better question would be: "how much would you pay someone to help you understand the parameters that will determine the value of the company and give you advice on how best you can optimize those parameters".

That said, how much one can pay would be a percent of perceived value - in other words a business whose valuation range is in lakhs would be willing to get an "unbiased opinion" for much less than someone whose valuation range is in 100's of crores!!!

Best thing for an entrepreneur is to come up with his/her own valuation and valuation range under various scenarios (good/bad/ugly etc.) based on as good an understanding of the product, client, competition and resource availability as possible.

Once that is arrived at, the entrepreneur has to be honest with himself/herself as to their ability to execute plans and strategies under various scenarios and factor that self-assessment in to the valuation.

Remember also that it is an iterative process. Should an investor be interested in your idea and not be put off by unrealistic valuations, chances are that if they believe you have to factor in some issues you have not considered, they will allow you to "run your numbers" again.

Another attempt by the sender

Hi Vishnu Thanks for your analysis and time spent on this, what i really wanted is not to valuate the value of the company rather i asked if the Entrepreneur would like to spend money to valuate the idea and the scalability of his product in market. There is a need for every 1 to evaluate his/her idea before they jump into the market.

..... but I am not having any of it!

The answer remains the same. There is no value to the idea if the idea is not in the market. If it is in the market, it is commercialized. If it is commercialized it is a business.

Of course there are ideas that are valuable but poorly executed and then one can argue that the idea had a different valuation than the business.

Yes, in hindsight, but not at the time of the valuation.

Even if given for free (i.e. you give away the product) all that it means is the value was not got by the person who commercialized it!

Some comments that were not a part of the emails

1) Perhaps I should explain the last sentence. The person who emailed implied (in my opinion) that the value of an idea is distinct from the value of that idea as a viable business. I therefore brought in the zero revenue aspect.

Should a valuable product be given for free, there is obviously no revenue, only cost. The value would then need to be measured on a basis other than revenue - but the cost and risk parameters would still need to understood and evaluated should the idea be sustainable.

2) Am I being unfair? You judge.

I believe that if you outsourced the evaluation and then some things changed,  you would very likely need to go back to an external agency to help you figure out your own business. Far better for you to get help on "how to value" rather than to outsource the valuation. 

3) I am fully aware that at the ideation stage, risks are higher because the unknowns are higher, and that therefore the valuation range could be wide. That is also precisely why, the ability to sense and make sense of, the parameters that will impact the value of the idea as a business becomes important. Far better to understand that, than to not.

All this reminds me of a quote that was made by some famous investor (forget who) which goes something like this: "I never buy a stock on somebody else's recommendation because then I would have to call them to know when to sell it."

Don't do it if you do not understand it (as well as you can!).

Stay true.

Vishnu.

The color of the t-shirt

In a recent conversation I was told by the founder of a failing firm that the only difference between his firm and that of a major competitor was "the color of the t-shirt".

Did you wince? I did.

This post is to use that failing firm as an example to point out some pitfalls that should have been avoided - in business analysis, business models, and business modeling - in the hope that others can avoid similar pitfalls.

As you read this, you may think: "basic mistake"; "common sense" etc., and you would be right. That said, this post is not to shame but to inform, for sadly many young firms do not think things through. Many large firms also make some very basic and similar mistakes though often for different reasons (organizational silo's, ego, too many "yes men" etc.).

I also do not want to shame because I found the entrepreneur to be a likable person, who gamely pursued an idea that he thought was good and I believe that he has learnt a few lessons from his ventures (this was the second one that failed). He also called a spade a spade and closed the business down when he realized that the venture was not viable. It takes courage to admit when you are wrong. Also commendable was the comment he made about feeling bad for those employees that had stuck with him. The entrepreneur in question will not be named nor will the type of business be mentioned.

So back to the beginning ..... and let's call the entrepreneur in question "E".

E came across my blog and wrote in asking for the link to the position papers and followed that up with a request to meet. We also discovered that we had a firm/client relationship. The meeting was to discuss E's business.

I started by asking E a few questions about his business and began listing out thoughts and ideas as E filled me in on his business (I already knew the product offering as a client) model i.e. purchase products on demand from low cost suppliers and charge clients typical retail rates. The product would also be delivered for free.

After this introduction but before exploring cost and revenue aspects I pointed out to E that essentially he was taking on what other businesses avoided i.e. "the last mile". As one can imagine, it is possible to build scale efficiencies before the last mile via distribution hubs, inventory management and so on. The last mile however is by definition distributed and costly to serve. An analogy would be that the process before the last mile is "mass production", while the last mile is a "custom" product. Businesses that have to be engaged in the last mile typically do so by having the customers pay for it and/or outsourcing the last mile delivery.

Given that E was taking on the last mile, he had scaling issues unless he found alternatives. Therefore the hope was that he was at least making money on the value chain before the last mile.

It turns out he was not. He had only one supplier who would not discount the goods purchased, and had (albeit small) working capital costs to boot because there could be a day or two between when E paid the supplier and when he collected from his clients.

At this point in the conversation I already had a sinking feeling. I pressed ahead with some cost and revenue aspects hoping to hear of cost efficiencies and pricing based on value. At a minimum, the hope was that the difference between the low cost supplier and typical retail price would allow for a sufficient net margin.

The opposite happened to be true. E had played the "lower cost to you" rather than the "value to you" card. He started off by offering a 20% discount on the delivered product thinking that it would be an investment (the difference between the discount supplier and "typical retail" being much less than 20% E was clearly buying customers) and build his customer book. It did build his customer book but it also hurt him badly when customers took up the offer en masse and overwhelmed the fledgling system he had resulting in his inability to deliver products to some customers; and it hurt him because clients now used him to simply get the discount, and left as soon as the discount stopped i.e. the customers were loyal to the discount, not to the firm.

My point here is that that thinking should have occurred before the business was launched. It took me about 15 minutes to get to the crux of it and by experience, E had learned his lesson. The point here is that one should model their businesses before they start it. Had E modelled his costs, and noted that he had no wiggle room on the supplier side, and that he had transportation and operating costs he would have come up with a simple revenue less costs equation that would have given him a clear picture as to the viability of the business model.

It would also have led him down the path of exploring whether he could price on value to start with. Having gauged the competition, and there was one large competitor that was getting investor funds and competing on price to customer, E concluded that the only way to compete with the larger competitor was on lower price to the customer i.e. to do exactly what the larger competitor was doing. As an aside, apparently this competitor has stated that it was losing money too but hoped to turn things around.

Again, had E modelled that aspect (i.e. low price) it would only have confirmed to him that he should not be entering into that business in the first place - unless of course he used a different approach/strategy, and had viable means of getting market share or extracting more value from the very start.

Yet, when I asked E what the difference was between him and his competitor he said that it was pretty much "the color of the t-shirt". It was actually a lot more. Some examples: they had a brand of sorts; they had some scale efficiencies in comparison; they give clients the option to pay before receiving the product (reduces working capital).

The writing was on the wall for E. He shared some of his numbers with me and then confided that he had already decided to shut down and had only wanted to convince himself that he had not left any viable avenue open (he owed that much to himself and his loyal employees in his opinion).

My suggestion to him was to either re-launch using a value strategy and building in (higher value) bespoke services while outsourcing delivery; or to shut down. Given that he felt he had explored some of the bespoke services I mentioned as examples, and his belief that customers would not pay for value as soon as the first cheaper competitor arrived on the scene, he really did have only one option.

Shut down.

I am now, because the service was so useful, a client of the competition.

A sad story because it could have been avoided. Sadder still because it is not the only such story.

Here is to hoping that entrepreneurs will take the time to think some of the basics through, and use realistic assumptions and different scenarios to do so.

Stay well. Stay true.

Vishnu.

Are you a socialist?

As noted in an earlier post I hosted a dinner to try and see if a group of entrepreneurs could come up with a straw man strategy to encourage entrepreneurs and entrepreneurship.

As a moderator/facilitator, I first framed the issues and the need to "connect the dots". During the course of the discussion (which I could have moderated better), I was guilty of making comments about what I believed in, i.e. the need to enable what I call the broad middle. In doing so I said such things as: "does anyone know what happened to people who came 5th to 10th in business plan or venture competitions?"; "nobody really cares about the middle, everyone is looking for the next big winner"; "we need to start a movement" and so on.

At the end of the evening, minutes before he left, one of the people asked me: "are you a socialist?". Taken aback (due apologies to socialists - so much of a bad rap in so many things has to do with poor execution, inability to evolve, the-other-way-is-wrong thinking etc.), I replied: "I am a capitalist. But it is strange you ask that because when I was a young MBA student, a friend asked me what I would do with a 100 million USD, and on hearing my reply said" "oh, so you are a socialist!"" (Note: History has shown that I had neither the luck nor the skill to be worth a 100 million USD!!). There was no time to discuss the point further as the person left.

After he left, I asked another invitee, for whom I have great respect, and who is familiar with my objectives and way of thinking, if he had heard the question and if he thought I was a socialist. This friend told me that there was nothing that even smelt of socialism about me and that there is often quite a bit wrong with labels anyway.

I reckon I am about socialist as Bill Gates or any other philanthropist who has made his/her money (except that in my case the funds are very limited and I deny myself many luxuries to do what I am doing). That you reach a point in your life when you have the luxury of stepping off of the job treadmill and doing something for society (whether society asks for it or not!!) does not necessarily make one a socialist.

I am not egoistic enough to believe that readers have any interest in knowing whether I am a socialist or not, or what my reasons may or may not be.

The point I did want to make is that what the question (possibly) implied was wrong. I got the impression that one implication of the question was that you cannot be a capitalist if you are trying to get an advantage for the "average" entrepreneur (i.e. the "best should win" theory). Another possible implication was that you cannot be capitalist if you do some good for the possible benefit of others without any benefit to yourself.

For one, I have long held with deep distrust anyone who is so sure that they can pick a (business/investment) winner. However expensive their suits and whatever their pedigree. On the other hand, I do believe that there are some who are far better able than others to make a winner given the same playing field.

One reason I want to help the "broad middle" (the "average" entrepreneur) is primarily because I feel that many of them are there (at least in this country) in the middle because of the environment. If that environment was more supportive, they would then be competing on a more level field and then the best business should win.

A second reason is that I do believe that not every entrepreneur has to become a  big player. Its OK to be "average" - so long as they are socially responsible and run their businesses efficiently and well, the economy cannot be worse off. They just do not need the hassles that currently come with the territory, and neither does the economy!

A third reason is that there are many Venture Capitalists (VC) and Angel Investors (AI) chasing the next firm that is going to be a runaway winner. Should the "broad middle" be more successful, they would only widen the investment pipeline for the VC's and AI's (and possibly even make feasible a small business exchange that would give VC's etc better exits and so on - see the dots do connect!)

Stay well, stay true.
Vishnu.

Useful actions .... worth emulating by other similar groups/organizations

Back in Mid-March this year at the Hyderabad Entrepreneurship Society (HES) meeting, a number of entrepreneurs expressed their need for functional knowledge and labor resources.

In response two things occurred. Both commendable. Here is what happened and some of my thoughts.

1) Vivek Anand, a busy entrepreneur who puts in the extra hours as organizer of the HES Meetup Group because he believes in Entrepreneurship, came up with the idea of an internship drive.

Rather than talk about it, he did some ground work, got some 150 interns to send their resumes and posted a date and time when HES members could come and interview the candidates. Another member kindly made his office space available (on Saturday and Sunday!) as a venue to conduct the interviews - free of cost!

The disappointing aspect was that very few entrepreneurs took the opportunity to interview the candidates. On Saturday, when I attended, there were 5 potential employers and about 50 candidates. The charitable view is that all the other 900+ members were busy and/or had all their manpower needs met. The less charitable view, and one that I hold, is that the charitable view accounts for only some of the members, while the rest simply did not bother. You can take a horse  to the trough but you cannot make it drink. Another argument for low attendance by Entrepreneurs could be that the approach taken was "build it and they will come" i.e. demand push as opposed to supply pull where Entrepreneurs state what they need and candidates are selected on that basis.

Here is why I would have thought that entrepreneurs would support the Internship Drive.  Entrepreneurs complain about the lack of resources and of having to compete with bigger, more established businesses. Picking a bright youngster as an intern would allow them to try and get that intern - if found to be good - to join them as an employee.

The interns seemed to sense the opportunity better than those entrepreneurs who did not attend. I got the sense that quite a few may not have been able to get better placements so were willing to try with smaller firms. That said there were also some who thought that the experience would hold them in good stead as they themselves were toying with the idea of becoming entrepreneurs; and there were others who clearly believed that they would be able to make a meaningful contribution. The latter may not even know what happens to quite a few interns at larger firms - they typically spend most of their time at the copy machine! (Oh I know there are exceptions ...)

As to the pool of interns, at first I thought that I had noticed a flaw - most of the interns were "techies". The event was not restricted to techies though there was a bias in that some of the colleges approached were engineering colleges. Then it occurred to me that an entrepreneur is unlikely to have much time to train an intern and would want someone with specific skills to do meaningful work. While limiting in one aspect, the positive implication is that the "techie" intern is likely to get meaningful experience. Was this what had motivated the "techies" to apply? If so, they were smart to do so.

On the other hand, it would also be useful to think how we can get more students from humanities and other fields to get useful internships with entrepreneurs. The problem needs more thinking (and some of us have agreed to meet on this) but my initial thought is that the solution lies in connecting two dots (educational institutions and entrepreneurs) better.

One other point. In the first hour, about 5 interns turned up. All male. Vivek got up, looked out, then sat down and said: "sad to see that its male dominated. Would have been encouraging to see some women try as well.". About 15 minutes later the intern flood gates opened and some 40 to 50 turned up almost at once, with women outnumbering men 2 to 1! ;)

2) Manoj Surya, an HES member who started a new Meetup group called StartUp Talks, sent out a request for a "financial expert". Just one day later he had a confirmed speaker, Nikhil Beheti, himself a Chartered Accountant and entrepreneur.

The event is to be held on May 04 and I do hope the speaker is good, the topic relevant and the audience both sizable and engaged. It will encourage more such information sessions. As of today, 24 people (excluding the speaker) have signed up. The Start Up Group has some 84 members.

My thoughts.

It will be interesting to see how the venue suits such a presentation and the format of the talk.
I had also requested that such information as could be shared before the presentation be shared so that the folks attending could do their homework and spend more time at the meeting discussing aspects that cannot just be read up. A recipe for example, can read and acted on, as can a grocery list. That type of content does not need a presentation.
It would I think have been good to have had entrepreneurs specify certain aspects they wanted to focus on so that the speaker could address that.

Stay well. Stay true.

Vishnu.

Dinner for ten

On April 13, 23 year-old Manoj Surya (heartening to see youths trying to get the entrepreneurship needle moving) held a MeetUp event in Hyderabad to talk about a Startup Fest to be held in Hyderabad i.e. to get some ideas and views on what such a Festival should be.

The venue was again in the open space, partially shaded by a tree, near the back gate of LaMakaan in Hyderabad. Possibly due to my disruptive questions (How do you define a start-up?) we got into an hour long discussion on what a Startup Fest ought to be (finale of a series of events? providing what to whom? and so on and so forth). Manoj then asserted himself - at which point I finally got the message: the Startup Fest was to be a big event along the lines of those conducted elsewhere, that will highlight and promote entrepreneurship - as opposed to an event that would celebrate the growth of entrepreneurship based on "building block" events.

I could see the sense in that - so long as some key actors in the system got together and made a good story about "why Hyderabad" or if an intellectually interesting but fun and engaging event was held to simply bring entrepreneurs together in the hope that network nodes directed traffic to the right endpoints. I cannot see a huge let-a-thousand-of-us-pitch-our-(often half-baked)-story-to-investors-in-the-hope-that-one-bites event being successful. Why on earth would  one want to broadcast a (often easily duplicated) potentially profitable idea to the masses? Would it not be easier to construct case studies whereby fake companies (each company at a different stage of evolution from concept to post revenue) had relevant issues that were discussed and solved with the help of experts? You still get to hear pertinent information without "opening your kimono".

In any event, I told the group that a Startup Festival (oops, believe the hip version is "Fest" - showing my age) had its place but that I would get a small group together that would discuss complementary (to the Startup Fest) events that would be sustainable and come back to the larger group with a "straw man" proposal for them to consider. So far so good.

On April 18th, some 10 of us met at my place for dinner and drinks to come up with the "straw man". After 5 hours of discussion, and a strong desire (by at least some in the group) to act as opposed to talk, the group decided (I was playing host and facilitator/moderator as I wanted the entrepreneur's - budding or otherwise - to claim ownership) that we should have a domain specific (I.T.,  given most in the group were techies) event. Beyond that there was no consensus except that it would help if one could pitch their ideas to experts and get good feedback. I suggested that rather than re-create the wheel I would check to see if some organizations were providing such events (truth be told, there is always some organization providing some version of the type of event needed), found that there are, and they were, and wrote to the group on April 19th with my findings and asked them to come up with a list of events that were not already being covered.

To date, one member of the group came back with more examples of start up services and a list of incubators and a presentation on Entrepreneurship in India.
This same person also developed a draft version of a presentation on Entrepreneurship in Hyderabad (i.e. a statement of some views on what is needed).

 MY TAKE (S)

My view (shared with the group) is that there is something for everyone somewhere out there. It may not be delivered locally or the quality may be poor, but much exists out there.

It is also my view that all the entrepreneurship services out there, regardless of quality are but expressions of attempts to satisfy perceived needs. There are of course those needs that are not yet perceived, poorly perceived, or daunting to undertake, but just making a list of every entrepreneurial service currently provided would at least highlight  the better perceived needs of entrepreneurs and would be a good starting point in considering how they may be linked to leverage their benefit (incubators and colleges for example).

The keys are in my opinion, that:

1) we need to get the meta-issues (behavior and attitude) into the mix as opposed to just functional (marketing, logistics) or product issues. 

2) we need to connect the dots be it actors or be it factors - for example can you get the best of various entrepreneur service providers together in one location, or bring them in a coherent way, but singly or in smaller groups to (in this example) IT folks in Hyderabad.

I believe that once the group gets to that point they will be better able to:

a) figure out what events to conduct

b) how those events should made available (how/what/when/to whom etc.).

I do hope the group succeeds. Their success will only help with my larger objective which is to "move the needle significantly" on Entrepreneurship.

While I think that many of the folks at dinner at my place were quite smart, I would venture to state that I would be most surprised to actually see a "connected" cohesive plan emerge.

My pessimism is based on the fact that despite likening (for more than a year now) the various parts of what I call the Complex Adaptive System (CAS) - a phrase that means ecosystem but conveys much more meaning I feel - to be discs spinning on their own, without any cogs that will turn them into gears and cause the entire system to move for the benefit of the whole, there have been no takers to help me put "cogs on the discs".

Perhaps I need to work on my "pitch" and/or find the right people. I will keep plugging away for now and hope that the discs (actors and factors in the CAS) will get cogs, become gears, and that the gears will start meshing.

Stay true, Vishnu.

Hyderabad Entrepreneurship Society

Apologies for being away from this blog for so long. A few valid reasons and many excuses. Truth be told every so often I feel like giving up if not on Entrepreneurship then on the country (my wife works in Hong Kong and I moved here to try and give something back to society by trying to enable entrepreneurship - being alone and unrewarded can be trying). But then again just as I think it is time to move out, I see examples that humble me and make me want to continue. Examples of raw courage by people one would not expect it from and who have everything to lose, examples of high intelligence from quarters you would never normally expect, examples of self-made entrepreneurs who have battled the odds and won, and examples of people drawn by a common objective who are brought together and who then try to resolve their problems.

A specific example of the last type is the Hyderabad Entrepreneurs Society whose meeting I attended on March 16th. They met at a place called LaMakaan. The space they had booked was not free after all so one person found some paper, wrote "HES Meeting" on it, got a foot long twig and pierced the paper through a leaf on a tree. There, we had a signboard, and space to meet under the tree! Some 50 to 60 entrepreneurs, hoping-to-be-entrepreneurs, people who just wanted to "check it out" and people who wanted to help. Every one of the entrepreneurs there were squarely in my target category of the "broad middle". That vast but hapless group who are ignored and whose way is strewn with obstacles and hurdles that seem to only get higher.

I had asked Vivek Anand (the organizer) if I may get a chance to speak and he allowed me to do so after most had introduced themselves briefly. I spoke about my project - why I wanted to do it, and how it was a movement. I also spoke about why it was needed and the importance of responsible and quality businesses (the competition is not in the next 100 meters or even 100 kilometers - but global). I also made some other points but this post is more about HES.

After I spoke a person got up and spoke about the 10 important rules of entrepreneurship. All of them common sense but uncommonly good common sense. The floor then opened up and I was astonished at what I saw.

Here was a group of people (unfortunately just two women) who wanted to succeed for various reasons in various products in various segments who one by one got up, said what they wanted BUT ALSO WHAT THEY COULD OFFER in terms of helping their fellow entrepreneurs!! They needed a hand, but were saying "if I can, I will give you a hand up". Brilliant.

Time and again - about 15 to 20 - I have been told by people to whom I spoke of my idea that my idea would not succeed because it required collaboration and that would not happen ('not in India"). I refused to believe that and now I was seeing with my own eyes that people were saying they would work together and for each other.  A great thing to see.

In no particular order I have reproduced a partial list of their wants and needs. They all go to the very points I have been making in meetings and in my papers.

- we need a support group
- we wanted to see how many crazy people there were (had to do with the notion also, of failure)
- we are here to interact (and learn/share) with others
- to gain knowledge, to learn how to do things
- to help other start-ups with funding
- looking for people to join them (as partners/employers)
- looking for "fresh" minds to join them (i.e. wanted a specific type of person who took the initiative and knew what it may be like to work for a start up).
- to share knowledge
- to find a solution together to solve office space issues
- to find a solution together to solve resource (primarily human) issues

Vivek spoke about an initiative that involved affiliates - which if I have understood it right is specifically something I wrote about in one of my position papers. It had to do with connecting people who had offerings in the various parts of the value chain and helping each other out. Even if fees were involved, and assuming that the underlying notion is that service/product offerings in the affiliate chain ought to be "market competitive" one can see how such a chain would actually help nascent entrepreneurs.

I offered to help these entrepreneurs to the extent I can (in terms of sharing what knowledge I have) for the next 6 months (since I do not know if I can commit beyond that) and asked only for the following: that they allow me to write up their cases for the benefit of others; that they help me think about my objectives if possible; and that they, if and when they are in a position to do so, give a helping hand to someone who needs it.

I have already met 4 of them (3 firms) one on one and have meetings with 3 more lined up. I was invited for a "clean tech huddle" (very similar to my "connect the dots" idea which I will post about if I have not already done so. Unfortunately I could not make that "huddle" but it was to have been over dinner and for people in a similar space to meet and discuss what they could do and to learn from each other.

Will write about them and their issues and the type of help they need in later posts.

Overall, it was like getting fuel into a system that was running low on fuel. I hope it encourages those of you involved in entrepreneurship to re-double your efforts.

Stay well. Stay true.
Vishnu