K Srikrishna

The Entrepreneur Life

Entrepreneurship is a Team Sport

As entrepreneurs it is easy to miss or even gloss over lessons that other entrepreneurs have learnt and more importantly shared! It is human nature I suspect to avoid or deny things that we don’t want to face! I suspect i won’t be th last one to have thought “Oh, I’d never do or feel that way” or “Not going to happen! These are different times or circumstances!”

Umang Gupta, founder of Gupta Technologies recently passed away. As someone who lived in the Bay Area through the mid-80s and 90s, I knew him as one of the many pioneering Indian-American entrepreneurs who paved the way for all the others who’ve followed.

His obituary in the Wall Street Journal recounted his journey as an entrepreneur and brought to fore many nuggets, one of which I resonated with me. It was advice given by my Umang’s father—much like my own did often.

Oracle considered acquiring Mr. Gupta’s company in 1994, but he couldn’t bear the idea of selling what he called his baby—a decision he later regretted. In 1996, he resigned as chief executive and left the company.

“My dad once told me, ‘No victory is final, and no defeat is fatal,’” he said. “I hadn’t paid attention.”

James r. hagerty wall street journal

Mr. Gupta went on to speak about the lessons he took away from this.

“I started to think of all the things I should have done to make the company outlast me,” he said.

One of his conclusions was that he should have hired people willing to challenge his ideas. “Decisions can’t be based just on what the founder knows or his gut feels,” he said.

This has been my experience too. Having good people around you, who can question or challenge you and hold you to account make all the difference between achievable success and avoidable failure!

Ask yourself who around you, whether a business partner, colleague, mentor or a spouse can hold you to account! Better and cultivate that ecosystem starting today!

3 Tips to Handling the Job Offer Call Well

photo: Monstera via Pexels

Companies are beginning to hire interview folks at rates approaching pre-pandemic levels. So I have ever more young people reaching out to me for advice. They are coping with a range of emotions—adrenalin from upcoming or just completed interviews, fatigue from too many interviews, depression that they may never land a job and anticipation and fear as they await a response.

Even as I learn to be a better listener, the caller usually expects me to provide them with some pointers or tips. These tips obviously vary with the individual, where they are in their I-need-a-job journey. In this post I’ll focus on a situation that I seem to encounter with greater frequency as spring approaches—that of a recruiter or hiring manager calling about their decision.

Here are three tips (and a bonus) to handling this call or meeting in a manner that at best makes you feel good or at worst avoids regret & recrimination.

#1 Be clear What is it you want—not just in terms of salary, job role/title, benefits/perks but culture, location, timings etc. Which of these are non-negotiable and when would you decline, negotiate for better or accept the offer?

#2 Be realistic The call may not be a job offer, but a request for further information or meeting. It may even be a polite decline. Even when it is an offer, it may be one of three possibilities

  • A disappointing offer in terms of the salary, job title, benefits or others terms
  • A good offer as in it meets your expectations, one that you’d say yes to
  • A great offer – it exceeds your expectations in one or more dimensions. Heck ya!

#3 Be prepared Plan for what your response would be to each of the above scenarios. Prepare a short scripts for each scenario. The intent of the scripts is NOT respond unthinkingly, but to avoid reacting by letting your emotions do the talking. Scripts could be as simple as:

[for a decline] “I’m sorry to hear that, appreciate your letting me know. “I’ve enjoyed interviewing with you and hope to stay in touch.” “Can you help me understand the rationale for your decision?” (in case they didn’t give you one) and “Do you have any feedback for what I could have done better or differently.”

[for an offer that falls short] “Thank you. I truly appreciate the offer and must be honest that I’m disappointed with the number (or terms). Can you help me understand your rationale for the money (or terms). I need to really think about it. Can I get back to you by [day]?” (usually a day or three)? [add.] Meanwhile here are some clarifying questions I have [terms & conditions, expenses, raises, travel etc.]

Even the best job offer is not a marriage proposal. Much as you want to scream Yes! on the phone, you’ll be happier if you take an hour or a day so that you don’t second guess yourself!

[for a good or even great offer] “Thank you – I’m so excited about this opportunity and appreciate your offer. Just to make sure I heard you right, here’s what I understand your offer is – [restate]; Here are some questions: When do you need an answer from me? Excited as I’m about this, I need to a day or two to: [pick 1]
• discuss this with my spouse/dad/family once I get this in writing
• sleep on it and I’m sure soon as we hang up I’ll have questions

Write back After you hang up the phone, or read their emailed offer, drop them a note, acknowledging the call or email, thanking them and re-stating whichever script you verbally delivered. This is not only good manners, but a great way to both express your interest and minimize any misunderstandings. Set expectations and always be polite. Don’t ghost them!

Happy hunting!

Carpenters, dads & markets

“Measure twice and cut once” is an aphorism that reminds us to “plan and prepare in a careful and thorough manner before acting. [wiktionary]” The origin of the saying lies in carpentry where if you cut a piece of wood too short, it is wasted and if too long, you’d have to cut again! This week as my class worked on figuring out who their target customers and which markets they should go after, the discussion of measurement and choices came up. Of course the class began by arguing that we should go after the biggest markets and then a few voices piped up that it might be better to focus narrower.

Dr. K. Kuppuswamy

Even as the discussion went back and forth, my mind turned to my father who’d have turned 93 earlier this week. Whenever I was faced with a choice, he’d ask me to figure out, “Are you plain Srikrishna, or Lord Srikrishna?” By that he meant know yourself, be realistic as to scale you want to act upon and focus on what needs to be accomplished.

As my class and I watched a video of Professor John Mullins of the London Business School , talking about how to size and go after a market. He recommends in the video that it might be better to go after a smaller market that you can dominate than a seek a tiny share of a large market (a common fallacy most of do in computing top-down market size). Certainly true especially when we are getting started.

As entrepreneurs it is critical to dream big, but it is even more important to have a good measure of ourselves, before we act. Thanks Dad for the faith, support and evergreen advice. I miss you!

Co-founders: Overcoming our biases

Photo by SHVETS production from Pexels

Two weeks ago, my class and I embarked on a discussion around co-founders. Do we need co-founders? If so how many? What should we look for in them? Where do we find them? Each of these can be entire blog posts. To me one of the interesting questions that came up was “How do we overcome our own biases when selecting a co-founder?” Students in two different classes posed a version of this question.

Reflecting upon the mistakes I’ve made and the ones I’ve avoided or overcome I see three key steps to minimizing biases whether in finding co-founders or other decisions we make.

  • self awareness Become and stay aware of the types of biases you are prone to, so you can recognize them and account for them even if you don’t overcome them. Here’s a useful summary of 20 common cognitive biases we encounter, based on a that BusinessInsider infographic [paywall].
  • accountability partners Ensure you have good people around—coaches, mentors, team mates or partners. They can question or challenge you and point out issues – be they assumptions, biases or other gaps in your thinking. This has been the biggest help to me (thanks Bikash & Rajagopal!)
  • test & validate Despite #1 and #2, you will still make errors or have issues. These are best dealt with by explicit communication. Articulate your assumptions, and ask questions of prospective partners and yourself. Treat this as you’d any experiment—build hypothesis, test and validate.

It is best to work on self awareness and accountability partners first, so that you don’t want to waste your time or the others and needlessly burn bridges.

Why today is always the best day to…

Photo by Dayne Topkin on Unsplash

This morning as I read Margaret Renkl op-ed titled “I just turned 60, but I still feel 22” it struck me how similar our thoughts were even if our origins and lived experiences were utterly dissimilar. Of course in my case for several years I’ve been telling my wife that I still feel 28! And this year the first year that I’ve begun teaching college freshman (and with both my own kids graduating from grad school), I realize I’m only a year behind Ms. Renkl.

Over the last several years I’ve attempted to move away from treating milestones be they birthdays or specific dates in the Gregorian calendar as [the only] special days. Yet its unavoidable when the whole world marks a day or date to not notice. Much is made of new year resolutions people make, the gym memberships they sign up for and the stocktaking that happens. Yet stocktaking whether done annually or weekly can be misleading.

Most people overestimate what they can do in one year and underestimate what they can do in ten years.

bill gates

As Bill Gates famously put it “Most people overestimate what they can do in one year and underestimate what they can do in ten years.” I’ve found setting goals for year or longer takes the pressure off and helps a general direction or vector to my life and planning and tracking on a weekly basis provides just enough motivation and balance between being stressed and making progress. It also ensures that the wife and I continue to keep the harmony at home.

As Ms. Renkl makes the point in her article, “I have lived long enough to have learned, too, that what is beautiful and joyful is almost always fleeting and must never be squandered.” This is the reason I urge young to-be entrepreneurs to start their businesses today or my friends to start writing that novel or book or hug their mom or say “I love you” to their kid. Today is always the best day to do whatever you plan to do!

What’s Your Monthly Nut?

Bea Wolper was the person who introduced me to the term monthly nut.

“What’s your monthly nut?” was the first question she asks any entrepreneur who approached her expressing a desire to sell their company.

‘Monthly nut’ is the effective income that you need to bring home each month to maintain your present (and perceived future) lifestyle.

‘Most people don’t know what their monthly nut is,’ Bea says. ‘You’d be surprised how many of them, successful businessmen who’ve been at it for decades, don’t have a ready answer.’ So if you plan to sell your business and intend to be happy you should start with trying to achieve clarity on two financial facts

  • Do you have a realistic sense of what your business is worth?
  • How much money do you need and want to address your post-sale life?

This is one of the questions that I addressed in my Q&A session with Dr. Annurag Batra of BusinessWorld. The full interview is available here.

Concepts such the monthly nut, a checklist to understand your own needs and a starting budget spreadsheet are all covered in my book The Art of A Happy Exit—How Successful Entrepreneurs Sell Their Businesses.

3 Steps to Getting the Valuation You Seek

Yesterday after I spoke to a group of Rotarians in Bangalore, the first question that was posed to me, was “How does an entrepreneur get the valuation they seek?” A few weeks ago, an entrepreneur who was still part way through my book posed the same question to me as in “How do I get the valuation I want?” The short answer is you build it. But how does one do that? Through careful planning, execution and a spot of luck!

In both these cases the entrepreneurs had been running their businesses for a considerable length of time. It was when they began considering exiting or selling their businesses that they found there might be a gap between their expectations and the valuations potential buyers might offer them. So how does one bridge this?

There are three steps to getting the valuation you seek. Understanding valuations, preparation and running a good process.

Understand how valuations work in your industry. Typically for a business in a mature industry, this works as a multiple of earnings (EBIDTA) or even revenue. A simple place to start is to look at others in your industry or sector who have been recently, say within the last 6-24 months, been acquired. Informal conversations with investment bankers can also help get a sense for this. Now do a reality check of this number against how your company would measure and what you seek. If you are lucky you are already there. Of course in fast growth or emerging industries, often technology-based, these numbers may not matter. For instance, my first company Impulsesoft had barely broken even and had revenues in the single-digit millions yet was able to attract both a top-tier investment banker and global buyers based on the industry (wireless technology) and technological innovation. So get a sense of what valuations are likely and where your own business falls.

Plan and work on bridging the gap between typical valuations and the one you seek – this requires you to first understand what you seek not just the valuation or $$ but also your own role, if any, post acquisition. Tim McCarthy founder of Workplace Impact hired a consulting firm and tasked them with the job of finding what sort of buyer he should look for, and what within his company would cause such a buyer to pay less than they deserve. They came back with a set of five specific things, not all of them financial that Tim’s company would have to address—things such as customer concentration, client size and EBIDTA. Over the next five years Tim and his team set about fixing these and sold his business for $45M in cash!

Run a good process One of my mentors Chandrasekaran was fond of saying “It’s a matter of their need and your greed, or vice-versa.” So understanding the potential buyers’ motivations and hence value perception is critical. Assuming you’ve clarity on the outcome you seek and done your prep, one of best ways to maximize value is to have more than one buyer, ideally several, at the table prepared to bid against one another.

Luck of course plays a bigger role than any of us is prepared to admit. However the more you plan, prepare and persevere the luckier you are likely to get.

Founders – these are the best of times

Last night a friend whom I hadn’t seen in nearly 25 years came home for dinner. This was significant for several reasons, not the least of which was that this was the first time we’d had someone over since the pandemic began. Of course when you see someone after such a long time, there is some inevitable story swapping of “Remember when..” But thanks to our grown children a lot more of the talk was about where we are.

friends meeting

We also connected over FaceTime with a third friend who’d originally introduced the two of us and boy did we have a roaring time! So while we worry about our own parents coping alone with the pandemic, the fear of a third wave in India, all the young people we know who’ve graduated and still looking for that right job, its easy to lose sight of how fortunate we are at so many levels.

Then this morning I saw this blog post by Jason Lemkin at Saastr. He founded EchoSign that was acquired by Adobe back in July 2011 to become Adobe Sign. He reminds founders that it is easy (even without the pandemic) to get pulled down by all that running a startup entails. It is best said in his own words.

“Remember — These Are the Best of Times. You probably don’t see it, not totally. You might even think the grass is greener as a VC, or a COO, or Something Else. Deep down you might think that.

Being a founder makes you alive. Fewer things are harder, … Nothing will be more consuming. It will change you. A lot. But you’ll remember every minute.

You will be alive.”

JASON LEMKIN

So for all your founders out there, keep the faith!

Gender Bias in Innovation

Ice Cream Maker
Nancy JOHNSON, (1795-1890) invented the hand-cranked ice cream freezing machine in 1843

One of the challenges of teaching lies in helping students identify, confront and hopefully overcome their implicit assumptions and biases. When it comes to teaching innovation, this ranges from asking and answering questions such as

  • What is innovation? Is it different from invention or creativity?
  • Who is an innovator? Are they born or made?

In part to answer the second question, we do an exercise. Each student has to name two innovators of their choice and try to identify what attributes they’ve demonstrated as innovators. Much to my chagrin, year after year Steve Jobs and Elon Musk (more recently) are the first choices of most 19-year-olds that I teach. Thanks to my colleague Stephen Golden, later in the same class, we make them do an exercise around naming women or minority entrepreneurs. The exercise invariably results in both the students and I being surprised with the number of innovators that we should be aware of but aren’t.

In her book Mother of Invention: How Good Ideas Get Ignored in an Economy Built for Men Katrine Marçal brings up a related point. Not only do women entrepreneurs not get the visibility, but often inventions that seem to benefit primarily women do not easily gain traction. The particular example she cites is the matter of a wheeled suitcase.

The rolling suitcase is far from the only example. When electric cars first emerged in the 1800s they came to be seen as “feminine” simply because they were slower and less dangerous. This held back the size of the electric car market, especially in the US, and contributed to us building a world for petrol-driven cars. When electric starters for petrol-driven cars were developed they were also considered to be something for the ladies. The assumption was that only women were demanding the type of safety measures that meant being able to start your car without having to crank it at risk of injury. Ideas about gender similarly delayed our efforts to meet the technological challenges of producing closed cars because it was seen as “unmanly” to have a roof on your car.

Marçal, “Mystery of the Wheelie Suitcase.”

Studies show that this gender (and other forms of) bias, stretches beyond tech

As with any problem that afflicts our communities or organization, the solutions have to begin with us. The first step is to educate ourselves and to begin conversations with others to both acknowledge the problem and to seek solutions. This post is a baby step and in future posts I’ll share both innovators who need to be known and what we can possibly do to address these inequities.

Coachability – a key to founder success

Coaching

As I interviewed a variety of founders, lawyers and venture capitalists for The Art of a Happy Exit, the term coachability kept popping up. Tim McCarthy, who’d founded a marketing agency that helped chain restaurants improve their worst outlets  was the person who first brought this up to me. 

Tim, who sold his business in an all-cash transaction for 9-times EBITA, went on to start a non-profit as well work with young entrepreneurs. As most of entrepreneurs do, he jumped into both these activities feet first.

Tim who’s directly coached hundreds of entrepreneurs, learned the hard way about coachability. In his own words, “I wasted hundreds and hundreds of hours.” By that he meant he took every person or call that he came to him before realizing that most were coming to him for money but few were really prepared to listen. So he came up with a two simple questions that he must have an answer to before he’s prepared to spend serious time with someone seeking his inputs or help.

  • Do they have listening skills? 
  • Are they determined to change?

But answering even these questions require significant time. So he devised a simple process. They need to write, yep provide written answers to a template. Tim won’t commit to anyone who won’t write. This in many ways leads to self-selection with only 10% of those seeking help willing to do the writing work. Tim has also begun gathering them in peer groups, along with other folks seeking help. As Tim wryly puts it “They quickly tire of hearing me speak!”

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Tim is one of the entrepreneurs featured in my book, The Art of A Happy Exit – How Successful Entrepreneurs Sell Their Businesses.

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