Innovation Series #5 – What is Entrepreneurship?

8 07 2008

The spirit of Entrepreneurship – the notion of human progress, development, achievement and change – motivates and energizes the people and organizations that improve our lives.

5 out of 10 people today want to be entrepreneurs. Why? Is the term fascinating or gives a social status? Is entrepreneurship new? No. It did exist since the beginning of human race. This post concentrates on speaking about what is Entrepreneurship all about, a basic definition and its dimensions.

There are by far many definitions of entrepreneurship, however, let us look at one of the best definitions which I ever read…

Entrepreneurship is the creation of an innovative economic organization for the purpose of gain or growth under conditions of risk and uncertainty.

Let us understand the underlined words above more in detail.

Creation means founding or starting or origin. So, this clearly means that if you are buying out an organization or if you are hereditarily taking over, you are clearly not an entrepreneur, you are simply a business person. However, there is one factor which can determine if you are an entrepreneur or not – the degree of change in the organization you are taking over.

If you would want to be an entrepreneur, you will need to create an opportunity. What kind of opportunity? If you are offering a new product or service or creating a new line of business. All these factors attribute to determine if you are an entrepreneur or not.

Economic organization means that you are creating an organization whose purpose is to allocate scare resources to bring out a new line of operation. What this means is that you might be creating a new business venture, a new line of operation in existing organization or even starting a not-for-profit organization.

Risk and Uncertainty are the conditions in which you begin your venture. They co-exist in any organization and go hand-in-hand. Risk refers to the variability of outcome. If there no risk in the organization, then the organization is operating in a risk-free environment and the organization is bound to grow over the period of time. Without risk, is there entrepreneurship? No. However, making calculated risks is what is recommended. If you are writing your business plan and you have not identified your risks and potential measures to overcome them, then the chances of you getting investments is very less. However, the more the number of risks you identify and device a contingency plan, the better is your execution.

Uncertainty is the confidence the entrepreneur has in his/her estimate in how the world accepts their offering. If there is no uncertainty, then it would be an everlasting profit making organization J Uncertainty is how markets works and this is what makes entrepreneurship exciting. The better you estimate your customers and how the world operates, the better are prospects of your organization profit making.

Where does Entrepreneurship exist?

Entrepreneurship clearly exists in countries which have higher economic freedom. Hong Kong, for example is the most economically free country, which clearly encourages entrepreneurs. Singapore, Bahrain, New Zealand, Switzerland, USA, UK, Taiwan, Bahamas and Netherlands appear in the top 10 countries in the world which provide the most economical independence.

On the flip side, North Korea is one of the most orthodox countries in terms of economic freedom. Angola, Azerbaijan, Iran, Libya, Somalia, Vietnam, Iraq, Cuba and Laos add to the list of most strict countries in terms of providing economic independence.

Sam Walton’s 10 Best Rules

Before I end this post, let me list down the 10 best rules Mr.Sam Walton has mentioned for his success.

Rule 1: Commit to your business and believe in it.

Rule 2: Share your profits with your partners (employees)

Rule 3: Motivate your partners, challenge them and keep score.

Rule 4: Communicate everything

Rule 5: Appreciate your associates with well-chosen words.

Rule 6: Celebrate your success.

Rule 7: Listen to everyone and get them talking.

Rule 8: Exceed your customers expectation.

Rule 9: Control your expenses.

Rule 10: BREAK ALL THE SULES. Swim upstream and go up way.

To put it in Mr. Sam’s words, the above rules might not apply to everyone, and also might not be the success factor for every entrepreneur. However, these were his success tips…

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Innovation Series #4: Entrepreneurship Life Cycle

7 07 2008

The aspect of entrepreneurship is very inspiring and many have taken this path to create history and to change the way we live. However, there are many areas where we see gaps and these gaps play a very important role in building the enterprise and making a mark.

It can be a commercial organization, not-for-profit or social organization, each start-up has its own way of building up and it has its own life cycle.

Below is the typical life cycle of an Entrepreneur:

Aspiration for Entrepreneurship

One day you get this beautiful idea and aspire to make your dream come true. The journey begins here. A journey, which is adventurous and most satisfying.

Is aspiration all enough?

Normally, it is good enough to realize your dreams. But, the commitment to your ideology plays a bigger role. Entrepreneurship is about contribution to the society, rather than thinking it to be a source of extended income. It is tough and it is a penance. Attitude is all what it takes to be an entrepreneur. Entrepreneurship is about living in Risks. If you are a person who does not like taking risks, then you are not set for setting up your own organization. Entrepreneurship is just not about setting up an organization for profit making, but for solving a particular problem – be it commercial or social.

In short, the way I define an entrepreneur is:

E – Energetic
N – Neutral
T – Tough
R – Romantic
E – Elaborative
P – Passionate
R – Researcher
E – Empowered
N – Novice
E – Enterprising
U – Understanding
R – Rich

Energetic – Need to have energy to face failure.
Neutral – Never get carried away, you need to always be on ground to take off.
Tough – When the going gets tough, the tough gets going.
Romantic – Need to Romance with your Passion.
Elaborative – If you cant be straight forward, then the road ahead is bumpy.
Passionate – Eat, Sleep, Drink only your thoughts.
Researcher – Only when you explore, do you succeed.
Empowered – Empower yourself with Passion.
Novice – Because, every day is a new day.
Enterprising – Because, every day you need to be creative.
Understanding – If you cannot understand others, you can never solve their problem.
Rich – Attitude, Passion and Commitment to Succeed.

Identify the Problem / Need

If there was no problem / gap in life cycle bothering your mind, you definitely would not have aspired to be an entrepreneur. However, this is not the only reason for you to aspire. But, in most of the cases, there is a problem / gap in the life cycle which bothers your mind and you want to provide a solution / better solution to solve the problem better / faster / economical / convenient. Think differently to identify the problem. Just because the whole world or people around you are taking about mobile or web, just don’t fix your ideas only in that spectrum. Look around and you will find many areas which need better solutions.

One of my favourite examples is from the book Innovative India. An auto is a common mode of transport in our country; however, have you seen a change in the structure or working of an auto since its inception back in the 1980’s? NO. Bi-cycle’s, 2 Wheelers, Cars, Bus’s, Lorry’s and all have seen a drastic change in their life-cycle. But, an auto has hardly seen a change. Why? One main reason for this is because the competition is very less. There are hardly 2-3 companies which manufacture autos and all of them have been very contented with the design and working of their innovation. Try speaking to any auto driver; he would give you an enormous list of good to have things in the auto. Looks like a good problem? Try solving it J

My intention of quoting the above is to request you to look around. There are many trivial things which need attention and which people can benefit.

Probable Solution

When you have identified the problem, you definitely must have given a thought about a probable solution. Lay out and outline your solution. Put it on paper for you to evaluate.

The Bottom of Pyramid is one area you would want to concentrate while designing your solution. The concept of BoP elucidates that the need for better and optimized solutions for problems which are frequented by majority of people. Do not aim your solutions at a high level, instead have a humble beginning and make the impact.

When you are designing a solution and want your solution to reach the majority, focus on the Pyramid. Identify your potential customers and then plan your solution. This gives your solution a better mileage than what you anticipate.

Assess the Solution

Meet with people, talk about the problem and share your thoughts on how you wish to solve. You might not want to speak to everyone, but definitely speak to your friends / family / mentor’s about your ideas because, without evaluation, it is like jumping into the lake without knowing the parameters of the lake.

If you want to make toys, spend a lot of time with children and understand their thought process. Many a times, we think we are providing a better toy, however, when it reaches the child, you might not be able to attract him/her for a long time.

If you are building a security system for home’s, speak to as many people as you can and understand the nature of problems they encounter. Example, in villages, there might be a threat with animals coming into homes. In cities, it is just not burglary, but children or domestic help might be at home and parents want to secure few things from them.

The list goes on. What I want to iterate here is that spending a lot of time with the end-users will give you a deep dive into their thinking and you will benefit because, when you get to design a solution, it is easily accepted.

Practicality of the Solution

How practical is your solution? Is it trying to provide Mobile Commerce solutions or search capabilities in the rural areas? You might have the most cutting edge technology, but the target customers are very important. We are not debating if your customers should be based in rural/urban areas, but we are looking at the usage and practicality of the solution.

As an example, I can mention the platform ticket vending machine in railway stations which have come up in the recent past. Do you notice one common problem with them? They accept only one rupee coins and five rupee coins. And if you insert a five rupee coin for one ticket, you do not get back the change. What happened? The queue at the counter still remains the same, because many might not carry change always. So, what happened to the innovation, it simply added burden to the organization – the return on investment (RoI) is not met.

Build the Business Plan

The most important aspect of realizing your dream is to have your business plan in place. You will need to put it in writing as to how you would accomplish your goal.

There are many versions as to how you should write a business plan. I only recommend only one way – write your plan in simple words. Do not use jargons which are very common and a common person might not be able to read/understand. Be Simple, Manageable, Achievable, Result-oriented and Time bound (SMART) while writing.

Few important aspects which you might want to consider/have them mandatorily addressed in your business plan:

  • Vision
  • Mission
  • Problem Identified
  • Proposed Solution
  • Financial Plan
  • Road map (Building the Solution and Return on Investment)

What I mentioned above is the minimum. If you can elaborate and write more, there is nothing like it. A Business Plan is not a frozen document, but a continuous working document. So, keep re-visiting you plan from time to time and keep updating the same as your idea evolves 🙂





Startup Saturday 1/2/3 – 2008

14 04 2008

After a long time, I am back in action with my blogging. However, I am back with some real good information which could definitely help you if you are looking at understanding and being part of Entrepreneurship eco-system in India, especially , in Bangalore.

As you are already aware of KickStart, our initiative to support Entrepreneurship and its activities, I will not dig deep into them; but would highlight our new activity – Startup Saturday.

SS

Our main motive behind this activity, is to provide a platform for entrepreneurs and entrepreneur wanna-be’s to come together and discuss various aspects of entrepreneurship. I know I am being a bit vague here, but I can assure you of what I wrote. We wanted to have this as a monthly event and started of the activity in February 2008. Startup Saturday happens on second Saturday of every month at the Indian Institute of Management campus in Bangalore. This is completely supported by NSRCEL, the incubation center of IIM B. Along with discussion, we provide a platform for entrepreneur’s to showcase their innovation to fellow entrepreneurs. Total time allocated for this event is 3 Hours.

We had 3 Startup Saturday’s till date and below is a summary of each of the Saturdays. I could not attend the second one, and hence will not speak about it much 😦

Startup Saturday – Feb 16, 2008

This has been our first SS and we have been a bit tensed with the number of attendees who would turn up. We did no great marketing for this event, just used all mailing lists we have been part of. We invited Prateek and Nitya of Muziboo to speak of their experiences and it was very nice of them to accept our invitation and be part of the first event (knowing the uncertainties of attendees and the organization of the event).

There were around 25 people who joined us to share our passion. The room is full and the atmosphere is exciting on this warm Saturday morning.

Here is a summary of their experiences…

Muziboo is an online music community with more than 1200 registered members and 1000+ music uploads.

Features of Muziboo

  • You can join for free
  • Upload your music
  • Tag yourself and your music
  • Comment music
  • Create, join, write on music groups

Growth Plan

  • To be 10,000 users by end of 2008
  • More channels for consumers
  • “One stop huddle” for music

Competitors
None as on date
Soundclick, Esnips come close

Few questions asked by audience…
Do you want to build Muziboo as a brand/comapny?
Prateek – Brand.

How many are writing code for you?
Prateek – Only me. Have been using Ruby on rails.

Can I just listen to music and not signup?
Prateek – Definitely.

How much did you sunk in till date?
Prateek – Less than Rs. 40,000.

How are you marketing?
Started with Orkut. Searched with “music” and scrapped each of them individually.

What amount of traffic is from search engines?
Prateek – Around 30%-35%.

Do you want to start your own Radio channel?
Prateek – Yes.

Prateek – We are also working on creating an online music composition tool which will help musicians to record online and upload.
Even though I did not sign-up to submit my music composition 🙂 I like the concept and I on behalf of KickStart team wish Prateek and Nitya all the very best in their endeavor. If you have not yet visited Musiboo, it is time you go and have a taste of good music.

Startup Saturday – March 09, 2008

As I mentioned earlier, I missed this event, but I know that it has been an exciting one and there were close to 50 participants this time – a whooping 100% increase 🙂

Startup Saturday – April 12, 2008

This has been more streamlined. We had the SS website up and made this a wiki which will help people to register if they were coming to the event. We had 91 registrations on the site and close to 50 attended the event.

Ms. Dhanya Menon, a startup legal expert and partner at ALMT Legal, Bangalore accepted to speak on Term Sheet. Here are some notes I made during her talk.

What is a Term Sheet?
Term sheet is an ‘indicative’ document.

What is ‘indicative’?
Indicating the terms and conditions of the venture.

From an entrepreneur’s perspective, a term sheet is very important – I will not go to any other investor, discussing about investments in the organization.
One needs to be very clear about the terms and conditions in the term sheet, and without one, no investor would invest without a term sheet sign-off.

While there is a term sheet signed off between investor and entrepreneur and in-between (with in the time lines), if the entrepreneur goes to another investor and signs a new term sheet, the first investor has all rights to sue the entrepreneur.

Clauses
1.Breach of Contract (Exclusivity)
2.Confidentiality
3.Drop-debt fields (What ever expenses investor have incurred in this contract, the entrepreneur needs to repay)
4.Public Announcements
5.Term Promoters
6.Size of funding (try to mention money in INR)
7.Valuation

What is the typical timelines in term-sheet.
Between 3 – 6 months.

Promoters
Only people who run the organiation on a day-to-day basis should be calld ‘promoters’.

Right of first refusal (RoFR)
Right of first offer (RoFO)
Series B investment should not happen immediately. Focus should be on business. The investor can make the clause for series B funding.

What are definitive documents?
Share subscription document
Employment agreement

Anti-Dilution
This is not good from investors perspective.

PS: I know that my above notes are not very information, however, I will work towards getting more structured information and post more information on Term Sheet as I learn about it more in detail.

Along with her knowledge sharing session, we had a demo of Storzz by Chandan Maruti, CEO of the startup. Storrz is an on-line mall. Yes, I used the term “mall”. Even though there are many differences in a real mall and a virtual mall, this mall gives you the flexibility of serious shopping. If you are looking for a particular product and looking for its rating in the market and customer feedback, this is the place to go.

Storrz is created as a platform for opening a virtual mall. If you have a business, and want to sell on-line without any hazels of creating an online shop, Storrz is the place to go.

You will be surprised with what is available on Storrz – From vegetables to groceries to Camcorders and Digital Cameras and with price comparison along with customer feedback. Check out the site and experience for yourself.

If you want to keep yourself updated about KickStart activities, please do sign up for our mailing list and I am sure you would benefit from it.

The next Startup Saturday is scheduled for 10 May 2008. However, on 19/20 April we have BarCamp Bangalore 6 coming up. So, stay tuned and be there.





Innovation Series #3 : Choosing a Mentor

11 02 2008

‘Mentorship’ is one of the key contributors to your persona/professional growth. No matter how educated you are or how many ventures you have started or been part of, Mentorship is very important to realize your dreams. Most successful business people definitely have mentors who must have helped them in one way or the other.

This short write-up on mentor ship is my learning, experience and thought.

Who is a Mentor?

According to Dictionary.com, a ‘mentor’ is a wise and trusted counselor or teacher. Note the word “trusted” because this is very important consideration which cannot afford to miss while choosing your mentor.

How do you choose a Mentor?

There are various articles and many speakers who have defined aspects which you need to consider while choosing your mentor. However, in my opinion, choosing the right mentor is a very tedious task and you will need to spend lot of time evaluating all your short listed people who can be your potential mentors.

Before you begin

Before you begin to evaluate various acquaintances to choose your mentor, you will need to first perform your SWOT (Strength, Weakness, Opportunities and Threat) analysis. This would provide you with what you have and what you need.

Second, you will need to write down what is that you are looking for in guidance and support to achieve your goal.

Third, you will need to keep identifying people whom you have access to, for approaching for mentor ship.

In my opinion, there are two approaches for finding a mentor; One, you have a person with whom you are working with (colleague / boss) and Two, you have a person whom you look up-to as a master in any subject which interests you.

Getting mentor ship in both the situations is not easy. There are challenges in finding either/both of the above mentioned kind of people around you and most importantly, they should be ready to be your mentor (this plays a major role).

Key Qualities of a Mentor

It is your very personal choice of choosing a mentor, however, there are few key qualities which are common to all mentors and you will benefit if you can identify your priorities and then choose your mentor.

Listener – Mentor ship is all about guidance. You are banking on the person to guide you to be successful in your work. ‘Listening’ is a very important quality which you can notice very predominantly in your mentor. If you have made a list of people whom you can look up to for guidance if that person is not a good listener, then you will need to revisit the name again (this is my very personal guidance). You can definitely compromise on this aspect to ensure you learn tactics in handling your business/project, but there will be many times when you want to question and learn from your mentor and hence, listening becomes a key attribute.

Optimist – Being optimistic is nothing short of greatness. The key attribute of successful people are that they are always optimists and this is contagious.

Teacher – You mentor should be able to teach you what you need. True, you will need to know what you want to learn, but your mentor should help get you the information when you are ready for it.

When you find a mentor

  • Understand your mentors schedules
  • Do as much research as possible regarding the person before you choose/begin. You are not obligated; if during your research you understand that your selection is not appropriate, then do not proceed. Do not just choose a mentor, because you have to, choose because you want to learn.
  • Be specific of what your expectations are. Do not approach the person and say “You are good at People Management. Can you teach me all of it?” This will never work. You will need to very specific of what you want – “I would like to learn from you, how you efficiently manage your resources.” Also, before proceeding explain what you do and how you do. It would give a good insight for your mentor as to what your thought process is and can guide you accordingly.

How do you become a Mentor?

Remember – “you take to give”. Do not be selfish and share your knowledge. As much as you want to be mentored, there might be others who look up to you for guidance. Share your knowledge and learning as much as you can.

The qualities you look for in a mentor are the qualities you need to have too 🙂

How does a Mentor choose you?

It is not that you choosing the mentor is important, the mentor accepting your request is also important. Remember the famous saying – “When the student is ready, the master appears.” This is the truth. You might be successful in finding a mentor, but your mentor accepting your candidature is the underlining factor. You will need to have patience and keep following up with your request. Your mentor should see the determination in you to learn.

Once you started working with a mentor, appreciate their time and knowledge and always be pro-active in accomplishing things. It motivates the person teaching you and also shows your interest and respect for the person.

Keep looking out always; you don’t know where you might find another mentor. Meet with people, talk to them and share your ideas.

The above are just my views and this might not be the way which works always. If you have a story or want to share your personal experience, please comment back and share with us.





Innovation Series #2

9 02 2008

Well Well, the week has been pretty hectic for me. In this issue I have few interesting links to share with you and before that, let me share you interesting information on 1.6 Lakh ($3500) Tractor which is making rounds in news. Bhanjibhai Mathukiya, a small time innovator from Junagadh, has created a mini tractor of 10 HP (Horse Power), after being moved by the plight of the small groundnut and orchard farmers in Saurashtra. This is the power of thinking minds. We definitely need 1 Lakh car and a Rs.10,000 2-wheeler, but we also need innovation at the grass root level to sustain our living. Just imagine having huge building, good houses, affordable and comfortable transport systems etc provide quality of life, however, what if we dont have any thing to eat? Does it make sense? In the last 10 Years, the price of rice which we buy from the dealer has not gone up by more than 5% at the farmers end. But, we have been seeing huge price raise in the rice we buy at regular intervals. This simply means that the more money you are paying the shop is actually going to the trader who is selling rice and almost negligible amount is going to the farmer. There is another similar innovation to the poor farmer – “Bullet Sathi” where there is a lost cost equipment which is fitted to an Bullet (2 wheeler brand in India) which can help the farmer in various activities during farming.The above two are classic examples of innovation at the roots and affordable solutions to the bottom of the pyramid farmers.Found an interesting link on Pluggd.In by Sharada on choosing your firms Legal Avatar





Power of Idea

31 01 2008

This is one of the most sort of terminologies we hear. All of us have ideas – ideas in our daily life, work, home etc. Then what is “Power of an Idea?” When you read an interview of any successful businessman or when you talk to people who run companies (entrepreneurs), one thing which you commonly hear is the power of an idea. Many aspiring entrepreneurs ask this question in forums – What do VC’s look for? and again, the common answer is “The idea”.

Let us examine this term with few known examples which created history.

We all know that the first attempt to fly was made by Wright Brothers in 1903, and also, most of us think that an airplane was invented at that time. But actually, the first draft of an airplane was made by Leonardo da Vinci in the 15 Century. This was the time an idea was born. After that, after close to 400 years, Wright Brothers dreamed big and brought out the idea of flying and today, we just cannot live without an airplane.

To quote a more recent example, Ratan Tata dreamed of having a common man’s car. He noticed the family of four going on a 2 wheeler without any space to anyone. He wanted to transform the way we travel and today, we know what the answer is.  When compared to GE, HM, Honda, Hyundai etc etc, Tata Motors is a small automobile company. But, how could they change an idea of car?

The above two examples make us think. An ‘idea’ is the way you look at things. All of us have ideas, to change the way we live or to create something which can help solve an existing problem. However, the result of the idea is left to the individual who thinks through it. At times, an idea or thought process becomes bigger than the thinker himself.

Another example we can think of is of Mohammad Yunus of Grameen Bank. He started small around 25 years back to provide support to “Bottom of Pyramid” group to enable them to live for themselves. What we see today is a transformation in life-style. Today, many countries in the world would want to replicate the same model to improve living conditions in their region.

Idea is powerful and it can really create history. However, the main ingredient of the idea is the committment of the thinker. In our airplane example, probably Leonardo did not have access to all the information and material required to fly in his time, but when the time came, the idea was re-born. This is the power of an idea.

What VC’s look for in entrepreneurs is their committment to their idea. The idea might not create history, but will it solve a particular problem is what is evaluated.

The first thing you do when you have an idea, is to live it up!





HeadStart 2009

29 01 2008

HeadStart 2009 is going to be organized on the 9 / 10 /11 January 2009.  Details will be published at the earliest to provide you with ample time for the preparation.

If you are an aspiring entrepreneur, entrepreneur, student, industry leader or an academician, you need to be there. Please visit HeadStart for more updates and join Friends of KickStart mailing list to receive updates regularly.