"Give me a place to stand and I will move the Earth" - said Archimedes to King Hiero of Syracuse.
Archimedes was trying to present the concept of "leverage" and moving the Earth was a great way to do it.
When you start a venture, it is important to be clear about what your leverage is - and play to it.
Most middle-class, well-educated entrepreneurs typically dont have the leverage of land, political connections or even cash - to be able to play the game with those as the key starting premises. The only leverage they have is their "smarts", their credibility in their social circle and their ability to work hard.
When you meet people of different backgrounds, you notice that some of them have very different leverages: a significant last name, acres of prime property, government relationships, a very comfortable bank balance etc.
In some cases, people act as if they have some of these - while in fact they don't.
You also notice that their approach to any opportunity is very different from yours. And that's because their leverages are different. They do not need to do the same things a middle-class guy has to do in order to capitalise on an opportunity.
So, here's my view: Identify your leverage. Play to your leverage. Do not try to copy or ape other people's behaviour because they will have leverages very different from yours (and in some cases, they might just be acting!)
Your leverage will change over time. When you are a 1-man startup, its just you and your background and your contacts. Over time, its your product, your team, your investors, your customers. Over time, its a "system" that exists in your company - and therefore your ability to make a large impact changes.
This is also the time to be careful. Every small movement you make has a very high change impact on the organisation.
It's like Archimedes finding a place to stand (finally!) and a lever long enough - and therefore being able to move the Earth!
Friday, June 25, 2010
Tuesday, March 23, 2010
Networking: Should you?
Networking, very often, is seen as a "not-so-good" word - if not a bad word. Almost like "sales". Everyone wants to be in "marketing". Sales seems to imply a smooth-talking, sell-anything-you can-and-run-away kind of person. In fact, in my last job (long ago), sales guys were called "Marketing Executives". In hindsight, i think it was to make them feel better. :)
But sales is really what keeps a business going - and real sales involves real people interacting over a real way to solve a very real problem. No amount of smooth talking will keep sustainable sales going.
In my view, in the short-term, markets might be inefficient. But in the long-term, it tends to recognize value (but thats a topic for another post)
Like sales, networking has these connotations of a lot of superficial interactions and parties - but no real substance.
However, if you ask any mid-to-senior level executive about how they got their most recent job or their new deal, a significant part of the answer lies in how their "network" helped out. Network in this context could mean alumni, friends, former colleagues, family etc.
Business communities throughout history have embraced the networking concept - without probably every calling it that. Weddings conducted over days are clear avenues for networking - be it for business deals or prospective partners for your child! Most business communities also clearly embrace the values of supporting their other community members - and seeking their assistance in building their business.
So, why should you network?
- Its a competitive world out there: Competition is not betwee companies or individuals. Its between networks. Network of Company A v/s Network of Company B. Network as defined as the entire set of well-wishers, employees, investors, customers, partners, suppliers etc. All those that can reduce the transaction cost of doing business and hence make the business more competitive.
- Leverages the real value of YOU: You are the sum of your skills, experience and the network of interactions you have had in the past. Only if you actively network, will you bring the real value to the table.
The important thing to remember is that the network that works positively for your recommendation will also work negatively if you don't deliver on your promise.
Next time: How do you go about building a network?
cheers! :)
But sales is really what keeps a business going - and real sales involves real people interacting over a real way to solve a very real problem. No amount of smooth talking will keep sustainable sales going.
In my view, in the short-term, markets might be inefficient. But in the long-term, it tends to recognize value (but thats a topic for another post)
Like sales, networking has these connotations of a lot of superficial interactions and parties - but no real substance.
However, if you ask any mid-to-senior level executive about how they got their most recent job or their new deal, a significant part of the answer lies in how their "network" helped out. Network in this context could mean alumni, friends, former colleagues, family etc.
Business communities throughout history have embraced the networking concept - without probably every calling it that. Weddings conducted over days are clear avenues for networking - be it for business deals or prospective partners for your child! Most business communities also clearly embrace the values of supporting their other community members - and seeking their assistance in building their business.
So, why should you network?
- Its a competitive world out there: Competition is not betwee companies or individuals. Its between networks. Network of Company A v/s Network of Company B. Network as defined as the entire set of well-wishers, employees, investors, customers, partners, suppliers etc. All those that can reduce the transaction cost of doing business and hence make the business more competitive.
- Leverages the real value of YOU: You are the sum of your skills, experience and the network of interactions you have had in the past. Only if you actively network, will you bring the real value to the table.
The important thing to remember is that the network that works positively for your recommendation will also work negatively if you don't deliver on your promise.
Next time: How do you go about building a network?
cheers! :)
Thursday, November 5, 2009
Speed? - A competitive advantage or a liability?
"To perfect things, speed is a unifying force," the race-car driver Michael Schumacher has said. "To imperfect things, speed is a destructive force." No company is perfect, nor is any individual.
That made sense to me. But then again, how do we explain the "Need for Speed" in ventures - early or late stage? Try telling a team or a bunch of investors that we are going to grow slow and steady! It sounds great till a few quarters pass - and then the restlessness starts. "Opportunity costs" start getting thrown in every 2nd conversation!
Its always about spotting an opportunity, getting the model right, getting a team together, raising the money and moving very fast - at what cost?
Is it that the nature of capital is forcing the speed? High-risk, High-return VC/early stage capital is allocated for risky models and the investors want to know if it works (or doesnt) pretty quickly. Their time horizons are also 4-5 yrs (max 7-10) and hence the need to create a business of some incremental value (if not N times) in that horizon.
Most businesses that i have seen - VC funded or otherwise - go through tremendous business model changes before they latch on to the one that works.
Does the speed help identify blind alleys faster - and then, atleast you know what not to do - faster than trying each alley for a few years and then finding it is a blind one?
Given the level of unpredictability in the market (competition, regulatory, pricing, consumer, macro-economic, technology etc), the best bet seems to be the team that can navigate the high entropy levels in the market and figure out, in real-time, what makes sense - without having to start from scratch.
To my mind, companies evolve. They are not designed to be where they are today. So, a series of good and bad decisions have made the business what it is today - with its inherent strengths and weaknesses, its "DNA" and its ability (or lack thereof) to change direction quickly.
So, IMHO, speed has to be used judiciously. Move fast if you think you have cracked the code (and in your gut, if you are honest about it, you will know). If not, be patient. Keep playing with the business, try different models, different target markets, different positionings - till you crack it.
Dont worry too much about what the market thinks about your changing avataars. Once you crack the code, they will all come round. Btw, they are not spending all their waking hours thinking about you either. So, enjoy the ride, be patient - and then accelerate when ready!
That made sense to me. But then again, how do we explain the "Need for Speed" in ventures - early or late stage? Try telling a team or a bunch of investors that we are going to grow slow and steady! It sounds great till a few quarters pass - and then the restlessness starts. "Opportunity costs" start getting thrown in every 2nd conversation!
Its always about spotting an opportunity, getting the model right, getting a team together, raising the money and moving very fast - at what cost?
Is it that the nature of capital is forcing the speed? High-risk, High-return VC/early stage capital is allocated for risky models and the investors want to know if it works (or doesnt) pretty quickly. Their time horizons are also 4-5 yrs (max 7-10) and hence the need to create a business of some incremental value (if not N times) in that horizon.
Most businesses that i have seen - VC funded or otherwise - go through tremendous business model changes before they latch on to the one that works.
Does the speed help identify blind alleys faster - and then, atleast you know what not to do - faster than trying each alley for a few years and then finding it is a blind one?
Given the level of unpredictability in the market (competition, regulatory, pricing, consumer, macro-economic, technology etc), the best bet seems to be the team that can navigate the high entropy levels in the market and figure out, in real-time, what makes sense - without having to start from scratch.
To my mind, companies evolve. They are not designed to be where they are today. So, a series of good and bad decisions have made the business what it is today - with its inherent strengths and weaknesses, its "DNA" and its ability (or lack thereof) to change direction quickly.
So, IMHO, speed has to be used judiciously. Move fast if you think you have cracked the code (and in your gut, if you are honest about it, you will know). If not, be patient. Keep playing with the business, try different models, different target markets, different positionings - till you crack it.
Dont worry too much about what the market thinks about your changing avataars. Once you crack the code, they will all come round. Btw, they are not spending all their waking hours thinking about you either. So, enjoy the ride, be patient - and then accelerate when ready!
Sunday, November 1, 2009
It's all about balance
How much money do I raise?
How much do I dilute before it gets too much?
How much should I have when there is an exit?
How many "good" people do I get onto the team before it becomes one too many?
Do I grow slow, conserve my resources - or go aggressive, push for growth - and assume that i will get more resources (money, people) as things develop?
How much time do i spend on the business? and how much with family?
Each context (person, team, industry, stage of business) has its own answers to the above questions - and many other such questions.
But repeatedly, to me, the answer is coming back to one word: Balance.
Like most other things in life. Too much of any one thing is not such a great idea.
Too much money makes the team lose perspective.
Too little and things get sub-optimal.
Too many good team members leaves very little elbow room for each person.
Too few and the team gets stretched beyond belief.
How does one find the balance? When i talk to friends, advisors, investors, industry experts, i get a lot of useful pointers.
But no one-size-fits-all answer but here are some thoughts:
- Are you in it for the long-term (the *real* long term...i.e. 15-20 years or more) and are building an institution? or are you in it to create an exit in 5-7 years?
- How is your financial stamina? Can you hold on and delay gratification for some more time?
- How is your support structure taking it? What does your family think of your current situation? Will they be happier with a faster liquidity event - and then (if you must) you can start another venture? :)
- Are you comfortable with the investor playing a significant part in your life for the next 5-10 years? More money you take, the higher the significance!
- Are you comfortable with someone else running the business after some time? It might be sooner than you think. If not, go slow -and enjoy the ride.
- Most importantly (IMHO), are you confident of the business scaling with the increased resources (money/team)? If so, go for it! If not, go slow and enjoy the ride till you are clear about the model.
Remember, there are 10 other smart entrepreneurs working on the same opportunity!
Once you see the model clearly, do not under-invest. Opportunities and gaps in the market do not lost for very long.
When you see a winner, bet big - but dont lose balance!
How much do I dilute before it gets too much?
How much should I have when there is an exit?
How many "good" people do I get onto the team before it becomes one too many?
Do I grow slow, conserve my resources - or go aggressive, push for growth - and assume that i will get more resources (money, people) as things develop?
How much time do i spend on the business? and how much with family?
Each context (person, team, industry, stage of business) has its own answers to the above questions - and many other such questions.
But repeatedly, to me, the answer is coming back to one word: Balance.
Like most other things in life. Too much of any one thing is not such a great idea.
Too much money makes the team lose perspective.
Too little and things get sub-optimal.
Too many good team members leaves very little elbow room for each person.
Too few and the team gets stretched beyond belief.
How does one find the balance? When i talk to friends, advisors, investors, industry experts, i get a lot of useful pointers.
But no one-size-fits-all answer but here are some thoughts:
- Are you in it for the long-term (the *real* long term...i.e. 15-20 years or more) and are building an institution? or are you in it to create an exit in 5-7 years?
- How is your financial stamina? Can you hold on and delay gratification for some more time?
- How is your support structure taking it? What does your family think of your current situation? Will they be happier with a faster liquidity event - and then (if you must) you can start another venture? :)
- Are you comfortable with the investor playing a significant part in your life for the next 5-10 years? More money you take, the higher the significance!
- Are you comfortable with someone else running the business after some time? It might be sooner than you think. If not, go slow -and enjoy the ride.
- Most importantly (IMHO), are you confident of the business scaling with the increased resources (money/team)? If so, go for it! If not, go slow and enjoy the ride till you are clear about the model.
Remember, there are 10 other smart entrepreneurs working on the same opportunity!
Once you see the model clearly, do not under-invest. Opportunities and gaps in the market do not lost for very long.
When you see a winner, bet big - but dont lose balance!
Thursday, October 29, 2009
Why do people become entrepreneurs - part II
In the last 10 years that i've been an entrepreneur, I've met scores of entrepreneurs - and many more potential entrepreneurs that were so close to taking the plunge - but for various reasons did not.
Some of the common motivators that get people thinking about e-ship:
- Independence
- Wealth creation
- Frustration with current job/corporate world
Once they get serious about it - and actually start planning their financials, convincing their spouse/friends etc, thats when the key issue of "What do i do?" comes up.
Seen a few categories of people on this front:
- Analyzers: Will do market research, focus groups, buy reports, business plan sensitivities to death. Will let the spreadsheet make the decision for them!
- Satisficers: Will do some bit of what the Analyzers do - but not a whole lot. Will go with the view that if overall, it makes sense - and if i like the concept and am willing to give it a full shot for 2-3 years, let me jump.
- Impulsive: First decide to jump based on the idea - and then build a case around it!
- Financial: "I want to make money. I dont really care what the idea is". Quite a few of these folks as well. As my friend, Jay, used to say, "Its like having a new girlfriend. Everything seems rosy and nice in the beginning. The old girlfriend suddenly does not seem that exciting anymore!"
Personally, am not sure if this model works...as there is always another brighter idea that you get after you find that the current idea takes a lot of grunt work. But guess what, taking any idea from concept to a business takes a lot of work - and time!
So, the other question is - is it a business or a hobby? A business has different parameters (profit, sales, clients, full-time etc) while a hobby has others (interest, spare time etc)
Why do they turn entrepreneurs? Sometimes, i think its the "new girlfriend" syndrome - and after a few months or a year, they realise that the older one was better!
But in a lot of cases, its for the joy of creating something while creating wealth for all stakeholders.
Entrepeneurship does violate the laws of physics! You create something that did not exist earlier! ...so, its surely exciting, dangerous - and fun!
Some of the common motivators that get people thinking about e-ship:
- Independence
- Wealth creation
- Frustration with current job/corporate world
Once they get serious about it - and actually start planning their financials, convincing their spouse/friends etc, thats when the key issue of "What do i do?" comes up.
Seen a few categories of people on this front:
- Analyzers: Will do market research, focus groups, buy reports, business plan sensitivities to death. Will let the spreadsheet make the decision for them!
- Satisficers: Will do some bit of what the Analyzers do - but not a whole lot. Will go with the view that if overall, it makes sense - and if i like the concept and am willing to give it a full shot for 2-3 years, let me jump.
- Impulsive: First decide to jump based on the idea - and then build a case around it!
- Financial: "I want to make money. I dont really care what the idea is". Quite a few of these folks as well. As my friend, Jay, used to say, "Its like having a new girlfriend. Everything seems rosy and nice in the beginning. The old girlfriend suddenly does not seem that exciting anymore!"
Personally, am not sure if this model works...as there is always another brighter idea that you get after you find that the current idea takes a lot of grunt work. But guess what, taking any idea from concept to a business takes a lot of work - and time!
So, the other question is - is it a business or a hobby? A business has different parameters (profit, sales, clients, full-time etc) while a hobby has others (interest, spare time etc)
Why do they turn entrepreneurs? Sometimes, i think its the "new girlfriend" syndrome - and after a few months or a year, they realise that the older one was better!
But in a lot of cases, its for the joy of creating something while creating wealth for all stakeholders.
Entrepeneurship does violate the laws of physics! You create something that did not exist earlier! ...so, its surely exciting, dangerous - and fun!
Tuesday, October 27, 2009
Why do people become entrepreneurs?
What is it about entrepreneurship that attracts some of the best minds?
Is it the wealth creation? Is it the excitement of creating something new? Is it the joy of navigating through complete ambiguity? Figuring things out with every meeting - and then realising that all you learnt so far does not apply?
Why aren't people happy in their high-paying jobs? Why are corporates struggling to hold on to some of their best talent - and in the end, losing them to entrepreneurship?
What is it about the corporate environment that makes people yearn for the freedom of being on their own?
After all, each corporate today was started by some entrepreneur long ago! What goes wrong along the way? Does the reason people become entrepreneurs get irrelevant after the business reaches a certain stage?
Questions. Questions. Next time, some attempts at answers.
Is it the wealth creation? Is it the excitement of creating something new? Is it the joy of navigating through complete ambiguity? Figuring things out with every meeting - and then realising that all you learnt so far does not apply?
Why aren't people happy in their high-paying jobs? Why are corporates struggling to hold on to some of their best talent - and in the end, losing them to entrepreneurship?
What is it about the corporate environment that makes people yearn for the freedom of being on their own?
After all, each corporate today was started by some entrepreneur long ago! What goes wrong along the way? Does the reason people become entrepreneurs get irrelevant after the business reaches a certain stage?
Questions. Questions. Next time, some attempts at answers.
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