3 Reasons Startups Need PR

Public RelationsEvery startup should engage in Public Relations (PR) from day one. Does this mean you hire a PR firm? Absolutely NOT! When you talk about your start up at your local college, a Meetup or a friend’s wedding, you are doing PR.

Of course, as with all such activities, if you do it in a systematic and smart manner it can pay off in a big way. It’s easy (and wrong) to imagine public relations to be a matter of hiring a PR firm and talking to the media. It’s really about letting your stakeholder community know that you exist and shaping their perception of you.

As all-knowing Wikipedia quotes

“The aim of public relations by a company often is to persuade the public, investors, partners, employees, and other stakeholders to maintain a certain point of view about it, its leadership, products, or of political decisions. Common activities include speaking at conferences, winning industry awards, working with the press, and employee communication.”

With that said, here are three reasons for a start up to do PR.

Customers If customer’s haven’t heard of you or know that you exist, it’s hard to get them to buy from you. A well thought-out PR plan, even if executed by one person, usually the founder, can do wonders. This is particularly true for anyone in the B2B business. It’s nice if customers have heard of you before you show up at their doorstep. This can be done in any number of creative and no-money-spent ways from blog posts, contributed articles or op-ed pieces in your local paper, talks at industry bodies or local associations, or newsletters. A side benefit of such PR activity is that you get to practice and refine your company’s story, which is always a good thing. It’s also a great way to figure what resonates with your target audience and in some instances, even refine who your target audience really is!

Employees If you grow, or land that first or tenth customer, you’ll find you’ll want to be attracting employees. Even more importantly, if you’ve hired folks, you’d want to retain them and keep them motivated. Nothing works like seeing your company’s name in the paper, a poster, on the TV or in social media, to both attract and inspire folks. If like most start ups you’re asking them to work hard and make sacrifices then such inspiration is not an option. In time, you can get your team to do the PR, which will help build their own personal brands and bring goodwill and repute to your business.

Investors At some point if you wish to raise money, whether from friends, family or other fools, or professional investors, it helps – much like with customers – if they’ve heard of you. While a lot of ink offers no certainty of raising money, it provides folks the comfort that you’ve been around, survived and hopefully thrived by the time you approach them. The beauty about PR done well is that it allows you to drive the conversation about what your company stands for and sets context, so that you are really not an unknown or worse yet, a . Imisunderstood quantity to prospective investors.

So darn right, as long as you spend a finite amount of time and constantly measure the effectiveness of your activities, I’d assert every start up should invest in public relations from day one!

This post was inspired by a question on Quora

Keep your needs simple – Lessons from my dad

Bench

Photo Credit: visualpanic via Compfight

“Why do you take the bus? Couldn’t you at least take an auto (3-wheeler cab)?”

My father never stopped asking his friend, a Gujarati Jain gentleman, this question each time he visited. Even the times he did come to our doorstep in an auto, my father whispered to me conspiratorially, “He probably took the bus to Adyar and took the auto for the last kilometer.

The said gentleman, had like my dad, landed in Chennai as a teen with less than Rs. 10 in his pocket. He’d then gone on to amass a considerable fortune in the plastics business. Yet, he maintained a disarmingly simple, nearly spartan, lifestyle. While my father pulled his friend’s leg about his frugality, his own actions were not all that different.

As kids we were always embarrassed, when my father would order idli-sambar – steamed rice cakes with spicy lentil – at even the fanciest of restaurants. Likewise we were flummoxed that he’d check in at the 5-Star Taj hotel with his boss, but choose to spend the night at his sister’s duplex in Karol Bagh. It took us more than twenty years to try and get him to wear anything other than the white shirt and pant that he wore every day to work – even then we only managed to get him try solid pastel color shirts!

My dad lived and breathed his belief to keeping his needs simple. Without my realizing it he’d trained me from day one to be an entrepreneur. Not that I was a good student. In my first foray at being an entrepreneur, I blew nearly $250 (yep, dollars) on business cards. Let’s just say I was a slow learner. But luckily I returned to my roots – when we bootstrapped our first startup. We didn’t buy a computer, we didn’t hire a coder – we began pitching customers. We kept it simple – emails and presentations. We operated out of my co-founder’s apartment and held day jobs while we tried to land our first paying customer.

The lesson I learned was not just frugality but to keep every element of life (and business) simple.

Keep your 

  • business simple, so others understand it. Stay focused
  • offerings simple, so customers just get it
  • pricing simple so buying what you sell is easy
  • cash tracking simple – know where it goes, what you need and have
  • organization simple – so your team is clear about their roles & what’s expected of them
  • life simple – early to bed, early to rise, love, affection & exercise

Thanks dad!

3 Steps to Resolving Team Conflicts

Conflict“It’s like we’ve done absolutely nothing these last five years. Everything we’re doing is wrong.” My friend was really upset. His company had just brought on board a new VP of Business Development and looked like the man was not exactly winning minds and hearts.

“Worse yet, he has the right answer for everything. I’m just sick of the guy – I don’t think I can work with him!” It took a while for my friend to calm down and when he did, I realized that he actually agreed with many of the new VP’s observations. In fact he’d been saying some of the very same things, albeit a whole lot more diplomatically and in smaller groups. Why then, was my friend not happy that he had an ally, a senior one at that, to set right the things that he himself thought needed to be fixed?

Team conflicts usually originate when something is said or done. And often, it’s not about what is said, but how it is said. Depending on the level of trust or lack thereof, this gives rise to questions about why it is being said – in other words, motive or intentThe secret to resolving team conflict is to both understand the what, how and why.

Content (the what) As most of our work is done with others, as team mates or in meetings, the ability to communicate clearly with one another is important. What is communicated need not always be agreeable or even acceptable at times. Some of us (or many times our bosses or god forbid, our spouses) go out of our way to avoid disagreements. That’s not a good thing, as healthy disagreements and alternate points of view result in better decision making. So if you don’t like what some one is saying, first examine whether you are disagreeing with the content of their statements. If you are, then a discussion (dare I say argument) or reflection can ensue. If however, as with my friend above, you don’t disagree with what’s being said then it’s time to look at style. 

Style (the how) We’ve all encountered folks who appear to have no filter between their brain and their mouths. So they blurt out things, at times hurtful, make sweeping generalizations and often label – “I can’t believe how lazy he is – why do you let him get away with it?” A lucky few, may be unaware they do this and may require only pointing out to change their communication styles. Other’s may range from a defensive “You know me, I’m blunt!” to combative “That’s they way I’m” all the way to outright denial, “I don’t do that!” What all these folks don’t realize is that the message is lost, because of the their delivery style.  It is critical to address this. People who won’t modify their communication style will not be effective and may be perceived to have an ulterior motive.

Intent (they why) All of us find it hard to hear less-than-pleasant things, especially about ourselves. This could range from the simply social “You have bad breath” to a more career limiting “You never let the other person complete their thought!” When such feedback comes from someone you trust and whose motivations or intent you don’t question, then you are willing to hear what’s said, even if unpleasant.  On the other hand, when the person is either new to us or we encounter a style that’s jarring and not amenable to change, then we question their intent. Why are they doing this – are they being political? Are they actually saying or meaning something else? At this point effective communication has ceased and you have yourself a team conflict.

Successful leaders and teams learn to separate Intent, Style & Content. Once intent is clear and non-negotiable, style issues can be addressed. Then real progress in terms of discussing contentious issues with the necessary focus on content (or what’s being said) can be made.

Addressing style issues will enhancing your team’s effectiveness and not doing so will cause much mayhem as intent is questioned leading to further conflicts. 

Simple Sales Tracker for Startups

This last quarter, I met several interesting startups, that had a clutch of good customers. When I asked them “How can I help you?” at least three of them asked for help with sales. Not what you’d think, as in find me customers or introduce me to prospects but how do I manage my sales pipeline. In fact two of them specifically had the question “How do I track my sales pipeline?”

Over the last several years, while I’ve used a variety of  tools from mere contact managers through sophisticated deal trackers to full-fledged CRM suites, I’ve found myself returning each time to a simple spreadsheet-based sales tracker, at least in the early days. The tracker has not only evolved as I’ve learned but stayed surprisingly simple and has worked just as well in a fund-raising function at non-profits as it has in a for-profit startup.

As I promised these founders, I’m open sourcing the sample tracker as an Microsoft Excel spreadsheet as well as Google docs template. The tracker can be used for selling products or services or combinations thereof. You can download it here.

The tracker has three parts.

1. Setup – your business basics

Based on the nature of your business (product or service), actual sales offerings and the sales process your business may have to follow, you can tweak the setup. All this is done in a single worksheet (the last one, titled “Stages, Categories, etc.” of the online sales tracker). This one time set up of your product or service offerings, your sales persons (or deal owners), and stages of your selling process, makes maintaining your sales tracker easy and minimizes human or data entry errors.

Sales Stages

Figure 1 – Typical Sales Stages

Sales stage this is simply the series of steps you have to go through from start to finish to close a sale. It begins with you first identifying a potential target customer for your product or service and runs all the way through receiving payment from the customer (never forget collecting the money is a critical part of making a sale).  Figure 1 shows one such typical sales cycle.

sales_stages demo

Figure 2 – Sales stages for a demo-based sale

Sales stages obviously can vary for your particular business – one common variant that I encounter is when a demo installation or trial period needs to be offered to a customer (something you ideally want to get away from, but unavoidable particularly at tech startups in the B2B space). In this case there may be more interim steps (or stages) in your sales tracker.

Similarly you can set up your product or service offerings, as in actual names or code names that tell you what product or service you are talking about.

Tip: Typically I’ve found it useful to precede the offering name with a numeral such as 1-Bluetooth Stack or 2-SEO Consulting, as this makes sorting and other types of numeral based operations easier. For instance variants could all be numbered within say 100-200 so reports can be easily generated.

2. Sales Tracker
The sales tracker is a straightforward spreadsheet, with each prospective sale or deal on a separate row. For each deal, the row (or record) spells out, who the customer is, what is it that’s being sold (opportunity or offering), what revenue (or selling price) you expect, what sales stage is the specific deal at, who owns the deal and what the target close date is. You can of course have additional fields such as comments, or next steps, key customer contact. Figure 3 below shows a sample tracker for product sales.

Sales-tracker

Figure 3 Sales Tracker

The tracker also has variants of the sales tracker, if you need to track number of units (N) and have a unit price (P) and therefore compute deal size based on NxP (tab, Sales_Tracker_B_Units). Similarly there’s a tracker variant for service or project selling, (tab, Sales_Tracker_C_Project) where you can add descriptors for a project in addition to any opportunity or offering name you provide. Of course your business may require yet another variant, but you can simply by adding columns make the tracker your own.

By using the Filter function in Excel, you can look up deals

  • of a particular size or greater
  • expect to close prior to a specific date
  • belonging to a particular sales owner or product (or both)
  • at or before a certain sales stage
  • that have closed but you’ve not gotten payment

In other words, an individual sales guy (that’s you) can see which of his deals he should focus on this week to close, what is the value of deals you intend to close this month (or week or quarter), which deals have NOT moved for more than a month – you get the idea, you can pretty much filter it any way you need.

3. Summary Report

Master Report

Figure 4 Report Master

The first tab Report_Master, is a quick overview report of your sales pipeline. It presently has both #deals and deal value by sales stage. I’ve set these up as formulas – these could just as easily be set up as pivot tables if you so desire. You could do without this master report sheet, by merely filtering the sales tracker sheet itself. Alternately if you find that you are running some searches often, you can just have them set up as reports. Its also useful to have a report if you multiple folks are using the tracker and you want a big picture view.

Good luck with your sales – as and when you make improvements do share and spread the love and knowledge. If you have any questions please feel free to ask questions in the comments below. Spread the word. Happy selling!

Consistency in User Experience

The last two days my team and I were at an offsite at a local hotel. The meeting room, was in the basement, at the end of a long corridor, nestled in a far corner of the hotel’s Business Center. While our meeting was productive it was a stuffy two days. Made me wonder, how comfortable the US President would be in the White House bunker (at least what I’ve seen of it in movies) given its even greater depth.

When you spend all day in a stuffy room, drinking fluids, having the rest rooms nearby helps. The first time I walked up to them I had to look closely to figure out which door led to the right room. A smart designer had decided to use two tiny androgynous figures, with the words HE and SHE written below them to designate the men’s and women’s restrooms.

She He

Not the best of experiences when you are in a hurry (and when like me you’ve walked into the wrong room, while on a phone!) Alas the story didn’t end there.

During a short break we walked up and out of the lobby to catch some fresh air. On my way back, I decided to use the restroom right behind the lobby and encountered the following two doors and signs that now read GENTS (that’s what I think it said, the fancy font made ready hard) and LADIES. Clearly the same designer was not involved in the design of these two (ornate) doors. Luckily I was wearing my glasses and headed into the right room without any mishap.

ladies gents

It could have been worse I suppose, with signs in German (HERREN and DAMEN) or symbols for male (♂) and female (♀) or playing cards (KINGS and QUEENS). At least for our toilets, why can’t we make things simple with LARGE pictures (for the language or visually challenged) and words for the graphically challenged. This is a solved problem.

I wish I could attribute this to one or more zealous or incompetent interior designers. However, starting from even the most common and widespread of software products (can you say Microsoft Word), we encounter such design inconsistencies every day. All of us, whether involved in building software products, ticketing portals or hotels or mobile phones, need to provide our users consistent, predictable and self-evident user experience aka good design.

I have a hard enough time figuring things out, when I’m not in a hurry to go! So please let’s pay attention to our poor users and help them have a more consistent and intuitive experience.

Experience Matters – Lessons from my dad

“I can line up ten old and experienced fools in front of you this evening.”

Experience

Photo Credit: shrutibiyani cc

My father always began his story with this line. As the professional CEO of a family-owned business, one of the challenges my father had to contend with was the different working styles of the younger generation. The speaker in this instance was one of the founder’s grandsons, who was being groomed to run the business.

The discussion was about the relative strengths and weaknesses of a potential new employee that they’d just interviewed. My father, a big believer in hiring the best person for the job, had expressed the thought that this particular candidate was not experienced enough.

As my father said it, that clearly youth had a big advantage, in both the energy they brought and in not being tied down to the way things were done. But for somethings, particularly in a fast growing company in a commodity market, experience mattered and could just not be replaced.

Thereupon a debate ensued on the relative merits of youth versus experience, before the young executive made this assertion. My father always laughed when he recounted the passion and vehemence with which his young protege made this statement. HIs response was always no amount of education – whether football, swimming or sex education in a high school or college classroom was as practical as getting out in the real world (or in that field or pool) and experiencing it.

Many years later, when hiring in my first managerial job in California or my startup in India, I found this to be repeatedly true. The fresh college grads, almost were always smarter, had studied stuff that we had not even heard of and thought of absolutely new ways to accomplish things often getting things done just because they didn’t know it couldn’t be.

Yet like with good design (or a good meal) no amount of studying prepares us as having done it before – ideally more than once. Riding a bicycle or banking a car on the curve or setting up a website or negotiating with a Japanese customer all works much better once you’ve done it before.

My father hired more than a hundred folks, with absolutely no experience – often young men who were looking for their first break. Several of them are running their own businesses or in leadership roles today. Nevertheless, he taught me, that for many roles or jobs, experience trumps all. The trick is knowing when you can’t do without it!

My father would have turned 85 yesterday.

2 Ways Growth Can Kill Your Startup

A popular Frank Sinatra song speaks of love and marriage going together like horse and carriage. The words startups and growth seem to be used much the same way. Recently I moderated a panel on “Why some startups grow and others don’t” at the TATA First Dot powered by NEN student startup showcase.

One of the questions that came up during the discussion was

Is growth always good? Are there instances when growth can be bad?”

The panelists all agreed that NOT all growth is good growth. Specifically,

Non-focused growth Naga Prakasam, angel investor and mentor, brought up the point, that growth unless directed and focused can easily derail a startup. So growth in revenue, even when profitable, could turn out to be bad in some situations.

One of two things most commonly happen

Revenue consideration – as a cash-strapped entity many startups chase any and all revenue – so you have product companies taking on services or service firms taking on non-core functions – pretty soon the organization is pulled in many directions with people stretched either too thin or into areas that are not their strengths

Customer retention – you have a major or important customer for whom you provide specific products or services. They want you to support them doing something that another vendor is doing – for instance in my first startup we did only Bluetooth software. However our customer, one of the largest accessory makers in the world, wanted us to help them with IT support too. Luckily we turned them down even though the risk of losing our core business to their IT vendor loomed. (Of course their IT vendor claimed that they could do Bluetooth software as well – but that’s a whole another story :) Such growth, unless planned as part of a larger strategy, will eventually end up hurting the customer and your business, as you take on things for which you either don’t have competence or distracts you from your core business.

Non-profitable growth In the semiconductor business, we’d always joke about “making it up in volume!As airlines, magazines and mobile phone companies learned the hard way, growing non-profitably, especially when you lose money on each sale is not a good thing. In  fact, the more growth you have the more money you’ll lose (or burn through) and rarely is the outcome pretty. Sure, there are times you have to get your foot in the door, enter a new market, test a new product when you will lose money – but hopefully that’s well planned and the downside is contained. Either it allows more profitable products to be sold or customers to be acquired and cross over from loss to profit making, when some volumes are attained (or fixed costs or amortized).

Growth, when focused and profitable is good. But when neither can easily hurt your startup and possibly kill it too!

How much money should you raise?

An example of a cheque.

The best answer to this question, as you’d probably guess is “Depends!”

The most common answer I hear is, “As much as you can” – which I’m not sure is the right answer, for at least two reasons. If you raise far more than you actually require,

  • you’ll be diluting more of your company at a price lower than you need to
  • you run the risk of developing a wide range of bad habits starting with mistaking raising money with running a successful business

Entrepreneurship literature suggests too much money can be as much (or greater) a cause for business failure as not enough money. Of course the same literature suggests that under-capitalization is the primary cause of slow to no growth of startups.

Better minds than mine have grappled with this issue, in a variety of manners. However most of them are set in the context of the US of A.  I provide links to several at the end of this post.

Whether you raise money, in what manner and how much will depend on

Nature of business – is it a service business, that is better boot-strapped? Web design, IT services, most consulting businesses all fall into this category. Does it require significant capital expenditure or up front investment – multi-location courier service or restaurant, manufacturing or high tech businesses fall into this latter category. Of course a slew of businesses fall in between these two – which would put them in the sweet spot for formal fund raising.

Nature of capital – are only friends, family or fools going to fund your business – most businesses would fall into this category – particularly service businesses that are going to stay small or local.  If you are already profitable or revenue making and are looking for capital to grow, you’re likely better off with debt. Of course in the Indian context debt may be non-trivial to access, despite a pile of money being available. Or do you need equity capital – as offered by angels or venture capitalists?

Assuming that you are a fundable business, I’d suggest asking the following three questions to determine how much money you should raise in your seed, angel or a series A round.

  • How much are you likely to spend over the next 18 months for your business plan?
  • Do you intend to raise another roundand If so how many rounds do you anticipate?
  • How much of your business will you be diluting in both the first round and subsequent rounds?

Fred Wilson’s advice to US startups is largely applicable in the Indian context too with a couple of caveats. He advises

  • raise enough for 12-18 months of business – in India I’d recommend at least 18 months
  • try not to dilute more than 10-20% – in India this might have to be as high as 25% percent

Can you raise too little money? Absolutely. Two things to keep in mind are

  • Things take much longer than you anticipate – the product ship, the first customer, incoming payments  In India a rule of thumb would be
  • It easily could take six months from the time you start your fundraising to when the money hits your bank

Good hunting!

What is the right amount of money to raise at a startup – Mark Suster
How much money to raise? – Fred Wilson
How much money should you raise from an early stage investor? – Seedcamp
How much should we raise? – Venturehacks

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Valuation 101 – for startups looking to raise their first round

maths

A recurring topic in conversations with young entrepreneurs and journalists across India has been that of startup valuations. Despite all the writing that’s out there, innumerable forums and meet ups, some questions – often very basic ones – persist. The questions themselves vary in actual phrasing from

How do VCs or angels value startups?
How much should I raise?
How much should I dilute? 

And each time as I’ve attempted to answer the questions raised, I’ve found us going back to the basics of What does valuation entail - what are its components and the math behind it. 

Note: In India, when people talk of valuation, they are usually talking of post-money valuation and the dilution refers to the percentage the investor owns, after their money is invested.

At the risk of oversimplification, all fund raising and valuation – regardless of fundraising round (angel, seed, Series A) – breaks down to three variables, which from the entrepreneurs’ perspective looks like:

I believe my company is worth so much today (pre-money) pV
I intend to raise so much money-  A
You sir investor will now own D% of my company

The reality though is more like this

Amount  (how much money you absolutely need to raise?) A
Dilution (% you’re prepared to give & investor’s ready to accept for A)  D%
Valuation (what the company’s worth post the investment (post-money)) V

Math dictates that the post-money valuation is Post-money valuation

(for the curious, pre-money valuation is obviously pV = V-A)

Valuation_triangle

In this scenario, the valuation (V) is an artifact of how much money you absolutely need to raise (A) and how much ownership (D) you are prepared to give up (or how little the investor is prepared to accept). Once you fix any of  these two variables the third is automatically fixed. So it’s important to understand which of the variables are really in  your control and what degree of flexibility you have in them.

Amount So how much should you raise? Any kind of serious fund raising can easily take you six months between first discussion and the money hitting your bank. So it’s a good rule of thumb to raise money for 18 months of operation, so that you can focus on running your business for at least a year without having to worry about raising money. You’d need this money to cover the operational expense of running your business over the 18 months and any capital expense or investment that you’d make in the business. For a startup that’s not raised any outside (of friends & family) money, based on your business plan this amount may vary from as little as Rs. 45-50 lakhs ($65K) to say 1.5-2 Crores ($250K). So this fixes one variable (A) in the valuation triangle. Of course if you plan to start an airline (Indigo) or overnight delivery (FedEx) or semiconductor firm, you’ll need a lot more money to start with, but most of us can start with $60-100K.

Dilution Particularly for any first round (seed or angels) the investor likely would expect to get 20-25% of the equity. Depending on where your business is at – concept, prototype, early customer traction, they may go as low as 15% or want as high as 30%. This is largely a matter of the maturity or stage of your business, the perceived de-risking done and the line of business you are in.

Comparables (what other companies in your line of business, in your geography got valued at) are relevant as is your revenue, margins, free cash flow but treat them as rough guidelines rather than definitive stakes in the ground. Sure, your market size and share, your business plan, your product or service state all matters – but usually, in the Indian context valuation is not absolute but a direct output of answering the two questions.

  1. How much money do I need to raise in this round?
  2. How much ownership am I prepared to dilute

So for instance, if you seek to raise Rs. 60 Lakhs (Rs 6 million) and desire to dilute no more than 25%, then your post-money valuation is

Valuation

Just as easily for the same money, if you have dilute more – your valuation could change without any real material change in your business. Depends how desperate you are and how greedy or generous the investor is. The table below shows the effect of A and D on valuations.

Valuation options

Reality rarely is this clean. Happy hunting.

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Why I Tell Indian Entrepreneurs “Stop reading TechCrunch!”

Every time I hear an entrepreneur in India tell me “It’s Angel List meets GitHub” I try not to grimace. Given the ardor of youth and the desire to get their elevator pitches easily understood, I can certainly understand young entrepreneurs pitching in such a manner.

TechCrunch (Alexa score 369) is more popular than livemint.com, India’s #2 biz paper (837) or nextbigwhat.com (640) and yourstory.in (802) – two popular Indian startup destinations. At one level just as the BBC (112), Huffington Post (264) and New York Times (305) are popular in India, it’s not a big surprise that TechCrunch given its brand and Silicon Valley pedigree is followed closely and devoured by the tech startup community in India. However the fact that something is understandable doesn’t make it healthy (as with my Doritos-eating habit).

Silicon Valley, even within the context of the United State is in many ways unique – and unlike anything in India. From the time Fredrick Terman first began molding young minds at Stanford, more than three quarters of a century has passed before Instagram, Twitter and Facebook appeared on the scene. And before them came the first generation Internet folks – the networking and computing folks before them and the grand daddy semiconductor firms before them, who were themselves preceded by the likes of Hewlett Packard and Litton. So nearly five distinct generations of companies and innovation preceded this current crop.

Alas young Indian founders approach TechCrunch without any of this context. For most of them, 2005 when I sold my first tech startup, is practically the dark ages and 1999 another geological era altogether.

As an angel and mentor when I encounter entrepreneurs, I find that TechCrunch plays an inordinate role today in their thought process. This is true particularly with startups dealing with bits rather than atoms.

Many of their assumptions are not grounded in the reality of today’s India – may not even in today’s America.

All they see is that a startup to sell tampons online raised $250K with just an idea on a napkin. Or Pinterest raised whatever astronomical amount of money without any real monetization strategy and Fred Wilson invested in Zemanta (who’d by then acquired a million downloads) even whilst acknowledging that none of them were clear how they’d make money.

The reality of the Indian entrepreneurial ecosystem is that we are yet to see more than one turn or “generation” of tech entrepreneurs. A large amount of money is following very few quality deals. The VCs are acting as PE players would elsewhere. Angel groups are acting like VCs would. Everyone’s looking for revenue, customers and traction (all of which are good), but not quite the high risk/high reward perspective of early stage funders. To be fair to the funding community in India, the supply side problem of deal quality is compounded by the fact that there have been very few exits, and their LPs, may be looking for medium risk/medium returns.

The needs of the Indian market and Indian consumers are quite distinct. Enterprises in India do have needs similar to those of companies elsewhere – databases, analytical tools, HR software, CRM systems – but their behavior and culture often are different. Consumers on the other hand can and do have very different needs. So when we talk of “building the Amazon or Zappos of India,” and unimaginatively try reproducing something done elsewhere, it serves no one well.

The good news is that oodles of young entrepreneurs are starting companies each day in India. Now if only they paid a whole lot more attention to what their customers are saying and what problems those customers face than what TechCrunch is reporting from the Valley, I’d like to think, we’d see a whole lot more innovation and business building amongst Indian entrepreneurs.