Distributing Equity in Start up – OCC

Today, we had another Open Coffee Club meeting at Thought Works campus. The theme for this meet is to discuss “Distributing Equity in Startup”.

We had a good gathering of 24 enthusiasts coming and it was a good distribution too – 60% first timers and remaining being the old gang including Ramjee, Himanshu, Sidu, Pratik and of course me 🙂

The discussion started with speaking about the equity distribution in a free-lancing kind of organization.

Ms. Manjula, who owns a startup in training and consultancy shared her experiences in distributing equity in her startup:

• We share revenues among ourselves.
• If I am involved in the contract, then I usually go for 70%-30% split.
• If I am not involved, then the person gets the complete share.
• They decide they stake at the agreement level itself.
• We usually make decisions on case-to-case basis.

People spend more than 60% of their time in office, and if you can be happy for that amount of time, then most of life’s motive is accomplished, which is irrespective of the salary and perks you earn is what Jayant Tewari, of Out Sourced CFO thinks. In India, we do not do architectural work and concentrate more on implementation work which reduces technical career path for people and this is where Entrepreneurs come from is what he had to say.

Let the stakeholder pay the employee directly, do not be a middleman and also build trust with employees, this brings results. You can also retain people with your projects for longer time. Startup’s do not put enough thought into ESOP’s. Usually, ESOP is not a good way of employee retainment, but ESOP is for people who are making things work in the organization.

How do you evaluate a one year old organization?

Ans: Look at your business plan, discount the financial projection by 50% straight.

Looking for a “Startup Capital” is being difficult in our scenario, only “Growth Capital” is being available to a large extent.

Sidu spoke about YCombinator, an organization focusing on seed funding for startup’s. YCombinator just helps entrepreneur’s with bare minimum fund for starting up their organization. The fund usually does not go beyond $20,000 with expectation of stake in-between 2%-10% from the startup.

Book Referrals – Here are few books for reference in Entrepreneurship and Innovation – Founders at Work, a compilation of stories of startup days is a fantastic read; The Art of Innovation – by Tom Kelley is an amazing read for understanding how Creativity pays and how you can innovate from the simplest of things in life; 37 Signals is a team which builds simple and focused software which help people collaborate and be organized.

Look forward for another OCC Meet in Bangalore.

OCC New Format

OCC Bangalore has had a good reception from many Entrepreneurs in Bangalore. Ramji and Vaibhav have put in lot of energy to get this group going and I am happy that they are doing an excellent job. When we last met, we discussed that this group should have more focus in the meets and there should be a better format. As on date, this group meets once in two weeks at some location mutually agreed by people. Honestly, till date, we have been meeting at Brew HaHa at Koramangala. We have come out with a new format – Technically, meeting once in two weeks is twice in a month. We thought one meeting in those two weeks should be focused on a particular topic and one person can speak on the topic / start a discussion on the same. The other meeting, will be a general catch up and we can have open discussion.
Today, as I write this post, the group has met up at ThoughtWorks office to discuss on IP Protection and Patent Laws. I am waiting for an outcome of this meeting, and requested Ramji to get some kind of minutes for people like me, who were not able to make it for the meet.

OCC Meet on 2 Sep 07

Today, we had another meeting of OCC@Bangalore. Actually, during the first meet, they have decided to meet once in 15 days (I didn’t know this as I left early that day). So, going forward, OCC@Bangalore will be meeting alternative Sunday’s at a location discussed and agreed on the mailing list.
It was interesting as around 30+ enthusiastic people came together. It was good to see good number of repetitive participants which makes the discussion more interesting.
Today, we discussed on “Marketing your Start-up” and it was really great to see people sharing their ideas and views. Ranjit from Kapston started the discussion. His company (Kapston) works on helping entrepreneurs with On-line marketing and he shared few insights into what his organization does.
Sharman, who has ventured into starting various organizations and also closing few of them shared his experiences with Marketing and mentioning that many entrepreneurs fail to understand the customer and being flexible because they have a strong bonding with their idea. I do agree with him…our idea/thought might be very powerful and we might be obsessed with it, but towards the end of the day, we need to look at what the customer needs. If this calls for re-thinking our idea, we should.
Pratik of Muziboo, took this discussion more forward. Muziboo is for people who compose their own music and the site allows them to upload their work and see what the world thinks about it. Here are few points from his thoughts:

• Muziboo does not have any set budget for Marketing.
• Friends are main source of spreading the word.
• Started marketing on Orkut.
• Spending time with bloggers to get the word of their idea to spread.

A very different approach for marketing and in few ways makes sense too. He is clear that he would wait until they reach good number of registrations on the site to work on other aspects of marketing. Why wait? Because, this site is for amateur and professional musicians to upload their composition and hear what others have to say. For this kind of functioning, they would need serious musicians and Pratik feels that he can get serious people to join the community through word of mouth and by personally speaking to people. I think this is a good approach when you are not rushing or looking at break-even at the earliest. Not every organization looks for breaking-even, but if you would like to sustain on the long-run, you need credibility and serious community.
Swaroop who started Ion, has a good and simple idea. In India, most of the time we do not carry our laptop to charge i-Pod. So, they have come up with a simple charger for charing their music machine.
Ramji did mention that having a “Personalized Story” for your idea would add lot of value in explaining what your service/solution does…practically.

This is an overall summary of our discussion. I have few pictures of the event on my Flickr account.

OpenCoffeeClub@Bangalore

Yes, have been late in posting about this event, but even then, I was there at the First OpenCoffeeClub – Bangalore meeting which was organized at Brew HaHa in Koramangala on 19 August 2007.

Ramji and Vaibhav came together to organize this event and it was a real grand success. I have few photos on my Flickr account 🙂
Now, coming to the event, I should say that it was fantastic to see more than 50 Entrepreneurship Lovers gathering there. Most of BCB4 Planners were there too 🙂 Unfortunately, I had to leave immediately after the round of introductions. Ramji, Vaibhav and Himanshu given a complete overview of the event, so please read what happened there in their blogs…next time will ensure to be there for the complete discussion.

Here is the list of enthusiasts who dropped in at the venue… Himanshu has a good list and I am just putting the list copied from his blog (I think its legal, because I am giving due credits to him…what say Himanshu?).

Ramji – OOC Planner
Vaibhav – OOC Planner
K. Aditya
Saurabh Singh
Kaushik Gala
Deepak Shenoy, founder of MoneYoga
Pooran Prasad, co-founder of Zealous Solutions
Vaibhav Pandey
Harish Kumar, founder of OneBigWeb
Sandeep C Senan
Kiran Jonnalagadda aka Jace
Manasi Baranwal
Shivakumar Ganesan
Prashant Acharya
Gunasekaran S
Sameerkanth , ConsultantNEN Bangalore
Venkat Ramana
Anand
Piyush Gupta, Co-founder of RouteGuru
R. Senthil
Kiran Kadekoppa
Parvez Ahmed
Ajit
Rohit Bansal
Prateek & Nithya Dayal, Co-founders of Muziboo
Karthik Jain, Co-founder of PicSquare
Satish TJ
Anshul Gupta
Meera K , Community & News media
Rajan, Co-founder of Motvik
PV Sundaram
Vipul Gupta
Bhasker Kode,Co-founder of “The Returnable Project”
Laura Parkin, Executive Director, NEN & Wadhwani Foundation
Yiting Shen
Saurabh
Paveen Kumar
Parineeth Reddy
Siva – now an Entrepreneur
Akshat Choudary, Co-founder ActivMobs
Amit Singh, Co-organizer of BCB4
Ashish Solanki, Co-founder Yulop
Puneeth Prasad

and last but not the least … me too 🙂

As i have not stayed longer after introductions, I am not able to write anything more, but just want to stress on one point – Meeting at events and discussing aspects of varied nature is good, but we should also strive to make our discussions a reality. I sincerely hope this happens.

So long…