Category: Entrepreneurship (Page 10 of 12)

Letting Go of a Founder

December 16, 2008 / Sri Srikrishna / 0 Comments

We’ve all read of horror stories of VCs ~~forcing~~ actions leading founders to leave their companies. But are there reasons for a founder to leave voluntarily or being asked to leave by other founders or the management team? Many a times, the answer is yes.

When people set out to start a business, a few jump in with little planning. Most though, do so after much forethought. Even when a good deal of planning has gone into starting a company, it is the rare entrepreneur who has actually thought about a scenario in which the founder leaves.

I realise that the very thought may sound nihilistic to some readers — can there be a start-up without the founder or can start-ups that survive without the founder do well or at the very least exist meaningfully?

The answer to both questions fortunately is yes. Apple is probably the best illustration of this, with Steve Wozniak leaving to pursue other interests and Steve Jobs being ousted by John Sculley – so not one, but both founders left (or had to leave). Of course Jobs’ return and subsequent success is a matter for another article altogether.

So what should a founder or founding team consider about the possibility of one or more founders leaving, voluntarily or otherwise, the company they founded? Is this inevitable? Can this be avoided? Or should this be planned for and if so how?

Before we examine these questions, it’s worth reflecting that few companies — Microsoft under Bill Gates or Dell Computer under Michael Dell being the exceptions — survive, grow and actually thrive under the same helmsman from founding to widely acclaimed success. Change at the top is more the norm than the exception. However start-ups, particularly in their early days, are so closely identified with their founders — and founders with their companies — the change, of a founder leaving or being asked to leave, can be traumatic. So it is best planned for and, hopefully, never actually encountered.

Leaving voluntarily

I remember the day when one of my partners informed me that another of our founding team (there were five of us founders) wanted to quit. We had not been at it for a year and the fire of a new adventure still burned in our heart and flushed our cheeks — so it came as a shock!

In this instance, the issue was one of personal belief regarding religion in the workplace. I am not sure, to that day, we had even thought about religion (or its absence in my view and excessive presence in the departing partner’s view). This is an instance where a founder wanted to leave voluntarily as he felt there was an irreconcilable difference in personal beliefs.

There can be numerous reasons for a founder to leave voluntarily, many of which may have nothing to do with the business itself — family commitments (wife wants to relocate) or health reasons (allergies in Bangalore) are examples.

Of course, there could be several other reasons — loss of faith in business partners; the gradual realisation that a start-up is not for him or her; or the thought of a Web-based cobbler service no longer exciting them — there are as many reasons for a founder to leave as there are people.

Having an inter se — Latin for “between or amongst themselves” — agreement amongst the founding team members is the best way to prepare for this eventuality. While the heartache that follows the departure of a founder may take time to dissipate, such an agreement will minimise the business impact. Also, the fact that such an agreement is in place prepares the concerned parties to consider the possibility of a founder leaving and address the potential causes up-front.

A good inter se agreement would at the least cover issues pertaining to shareholding: Do insiders or the company get first right of refusal? Will the leaving partner be permitted to still hold some or all of his or her shares? If so, will he or she retain voting rights? If the company bought the shares, how would these be valued? What would the payment terms be? How would the death (strictly speaking this would be an involuntary departure) of a partner be handled?

A good corporate lawyer would be able to pull together a reasonably well thought out inter se agreement. Most people are comfortable having health insurance and don’t blame it as the cause when they fall sick. However, many folk balk at having an inter se agreement believing this may sow the seeds for the undesirable to happen.

As someone who’s been there more than once, I would say that you are better of thinking and planning for all eventualities and this will never be the cause of a partner leaving. And you will be glad it is in place, when they do actually leave.

Forced to Leave

There are primarily two different stakeholders — the Board of Directors and the management team — who may force a founder to leave.

In venture-funded companies — most of which have active boards — the board could be the primary driver for change, particularly if a founder is the CEO of the company. This could arise for good reason — if the company is growing faster than the CEO/founder is, someone else should be brought in as a replacement.

The founder, in this instance, could then focus on other areas such as key technology, marketing or other contributions.But if he is not prepared for the shift, he may be asked to leave.

Alternately, a founder may be asked to leave for not-so-good reasons such as having rubbed powerful board members the wrong way.

For such founder/CEOs of venture-backed companies, having an explicit employment agreement could avert dismissal under unfavourable terms or without cause.

The other founders or management team, particularly in closely held start-ups, can also force a founder to leave.

Again, the reasons could range from the appropriate, namely incompetence, unethical behaviour or sexual harassment, to the inappropriate — politicking with other members of the founding or senior team in the company.

The best way to address this is to have a clearly spelt out code of conduct, periodic performance reviews (including peer feedback) and open communication so that there are no surprises.

The inter se agreement is once again a good safety net for all parties in this instance.

Asked to leave

This is the hardest thing to both plan for and execute. While asking a founder to leave may not sound that different from forcing them to leave, it is not trivial and is the most likely of the three situations an entrepreneur will be faced with.

When a founder is caught stealing, for instance, the decision can be black-and-white and he can be terminated or forced to leave.

However, it is much harder to confront and tackle issues that have to do with cultural mismatch or personal behaviour that, while legal, show poor judgment or the more common issue of self aggrandisement at the cost of the company or its employees.

The best way to address this situation is to ask ourselves the question, if the person doing this was an employee or anyone other than a founder, would they be asked to leave. If the answer is ‘yes’ for an employee, it ought to be ‘yes’ for a founder.

This is, of course, easier said than done — for founders have great emotive appeal — to the rest of the company, the community and, of course, to themselves!

However, as our mothers taught us, a stitch in time, does indeed, save nine!

Here experience and my scuffed knees speak — all those start-ups that avoid confronting this sooner, end up regretting it later.

(This article was published in the Business Line print edition dated December 15, 2008)

The right time to start a business is NOW

November 16, 2008 / Sri Srikrishna / 0 Comments

Photo: Theen … via Compfight

“As soon as I get enough experience, I will start my own business,” is a common refrain of many prospective, usually young, entrepreneurs. “I need to understand how the value chain in retail works,” or “I will work in a small/large firm to learn this, that or the other,” are all reasons that I hear soon-to-be entrepreneurs give to put off getting started. I would assert that there is never going to be a better time to start your business than now, particularly with the current financial troubles that are roiling global markets and making everyone in business antsy. Even if it gets worse before it gets better, a downturn such as this is the best time to start a business.

The reason a downturn is a good time to start a business is three-fold in my view. First, prospective customers, though not always willing to part with money, will be prepared to give their time. Their time, which would be hard to come by in good times, will help you build meaningful relationships for the future. Even more importantly, it will help you comprehend what issues your customers truly care about and fold that into your product or service offerings. Finally, bad times are good times to learn how to make your dollar, pound or rupee go much further. Once you have learnt this lesson, it will serve you well through the rest of your business life. That being said, you don’t have to wait for a downturn to start your business. The sooner you get started, the sooner you will realise that you know even less than you thought you did and the sooner you will begin learning what you need to, and you will be far too busy to wonder if you have timed it right!

Build relationships

Lest I have not said it enough, businesses are about relationships. And relationships take time; often much longer than your business can afford and far more time than your customers can afford to give you. In that regard, the sooner you begin building relationships, the better off you are. Ideally you’d have embarked on this way before you started your enterprise. It’s worth pausing for a second here to comprehend what ‘building a relationship’ constitutes. Most of us intuitively understand the word relationship in the context of families, even though we may grimace or smile at the thought; friends; and social acquaintances, folks we know such as neighbours, friends of friends and relatives of friends. So what does it mean in the context of a business?

In my view, simply put, a relationship in a business context, much like in the rest of our life can range from casual acquaintances all the way to life-long friends or occasionally a spouse. A relationship moves from being one of merely dealing with one another (cold calling in sales or collecting a purchase order or payment from finance) to a more meaningful one, when both parties are prepared to share and give of their knowledge, time and energy. This could be sharing thoughts on the marketplace in general, what other companies or folks are doing, all the way to each others’ key care-abouts, concerns and plans.

Meetings over coffee, attending a trade show or seminar together, playing together (from billiards to white-water rafting) or dinner followed by karaoke all help build a relationship. Not all relationship building need be done face-to-face — SMS or texting breaking news or a thought for the week, e-mailing interesting items of business or personal interest, newsletters, telephone calls or even the occasional instant message (IM or chat) can all help build relationships. Of course, be sensitive to the needs of the other party; you don’t want to be seen as a spammer or worse yet, a stalker! When in doubt, err on the side of less not more.

Notice most methods of building relationships are not transactional and even when interacting for a transaction, doing what your mother advised you to do — making small talk, being polite, saying thank you, all go to building a better relationship. And there is no better time to build relationships than now, so get started.

Validate market needs

One of the sheer joys of being an entrepreneur is the number of times you get turned down for appointments, let alone capital, loans or purchase orders. The fact that we persist and actually thrive despite this speaks of our faith in what we are doing. While such faith is good and even necessary, it can be just plain wrong. A good way to ensure that you don’t expend all your cash, emotion and energy barking up the wrong tree is to validate what the market needs. Such validation is a lot easier said than done.

Most consumers or customers don’t know if they really need something, especially if it is not something they have encountered before. Prior to Hotmail or more recently FaceBook people were not clamouring that their lives were incomplete; nor did the absence of mini-vans or flat panel plasma displays or soap in Re 1 sachets lead to consumer revolts. As Badri Seshadri, founder of New Horizon Media, a leading publisher of non-fiction in Tamil stated, “Supply has to lead demand, sometimes.” It is here that having built relationships with others in the business, you can seek to have your ideas reviewed, critiqued and if lucky validated.

As with New Horizon, sometimes there is no alternative but to get your product out there, but even then, you can validate the market need through calibrated testing be it pricing, and in their case distribution channels and different book titles. The market not being a static entity will require you to continuously measure it and tweak your response. Downturns are again good times for this for customers and the marketplace will be willing to provide you more time and greater feedback. However, given the ongoing need for testing the market, the sooner you embark on it the better. So once again, there is no better time to validate market needs than now.

Learn frugality

One of the biggest mistakes I made when I first considered starting a business was to blow nearly $200 (yes, two hundred dollars) on fancy business cards. Granted this was 12 years ago, when I was a callow youth and some credit must go to my printer who up-sold me on the expenditure. Besides never doing business again with that printer, I learnt the hard lesson that money is better spent (or not) on so many other things than fancy business cards. But it is never too early to learn the lesson of frugality.

No company, however big, can afford to not watch its spending and particularly its cash position — this was true even before Lehman Brothers filed for bankruptcy. While there is a fine line between being frugal and being a miser, it is best learnt by constant practice. Yes, money has to be spent in order to build and grow a business, but how much and when is always a matter of debate. Most folks entreat employees to spend the company’s money as if it is their own, but then again most folks don’t manage their own money too well. It’s best to ask yourself ‘why’ three times — Why am I spending this money? Why now? Why this much? Bad economic times are good times to learn about frugality for you see so many people around you — your customers, partners and suppliers — practising it. Don’t be a laggard and don’t wait for bad times to practise it.

As with most advice, take this entreaty to be frugal as a good thumb rule, but use your own judgment on each occasion for there will be good times, particularly in downturns, to invest for the future.

Trust your instincts and if you have built relationships and continuously validated the market needs you’d have good reason to back your instincts.

This article first appeared in the Hindu BusinessLine in November 3, 2008.

Capt Kirk’s Leadership Style – Is it right for entrepreneurs?

August 25, 2008 / Sri Srikrishna / 0 Comments

Photo: pds209 cc

A casual search of the blogosphere, with the words “Capt. Kirk” and leadership spews a long list of largely positive descriptions of Capt. Kirk’s leadership style. In fact, a secondary school principal, has actually written a referred article on Captain Kirk, His Leadership Style as a Model for Principals in the National Association of Secondary School Principals (NASSP) Bulletin!

For those of us old enough to have caught William Shatner as Capt. Kirk, admiration is usually the first response (especially if we were lucky enough to miss the priceline.com ads – I had to move out of the country for this). Capt. Kirk cut a dashing figure – a man who surrounded himself with smarter folks (Spock the scientific officer, Bones the Doc and Scotty the engineer), always prepared to lead from the front and always got the girl! I am sure I am not the only 40+ fella who wished he were in Capt Kirk’s shoes, when we first encountered him.

Albert J. Bernstein and Sydney Craft Rozen, in their book “Dinosaur Brains – Dealing with All Those Impossible People at Work” speak of cheering Capt. Kirk as he staved off an attack by the Romulans, even as he just recovered from a problem of rapid aging. “What a manager!” was their first feeling. Then they began wondering “Or was he?” They go on to say:

In our culture there is some confusion between management and heroics. The distinction is quite simple: The hero handles everything single-handedly; the manager delegates. If a manager is indispensable, is he or she really managing?

What is true for managers is truer (in spades) for entrepreneurs, who inevitably are in leadership roles which they play all too often from Capt Kirk’s heroics’ handbook! I am certainly competent to speak, having been an adrenaline junkie till recently (others may argue I still am) – always charging off (in my strapped sandals, we don’t have much use for steeds, white or any other color) to solve problems. Luckily having great people around me, who were neither shy nor too polite, cured me off this, I’d like to think. However, as Capt. Kirk himself has shown, having good people (“Dammit Jim, I’m a doctor not a miracle worker!”) around is not a sufficient reason for not falling into the “I’m here and will take care of everything” habit.

So stop for a moment and take a look at the ol’ mug in the nearest mirror and ask yourself “Am I a leader or merely a hero?

Mentoring folks – can start-ups afford to not do it?

August 25, 2008 / Sri Srikrishna / 0 Comments

“Maybe you can tell your team about your desire to partner with us.”

As soon as these words left my mouth, I realised that I had made a major faux pas. The words were addressed to the visiting CEO of one of our major prospects; one we had been trying to get interested in our products and services for nearly a year.

I was young and probably viewed myself as the hotshot marketing guy and the words had rushed out due to my frustration at dealing with the lack of coherence within their company.

Our chairman, who had put his personal credibility on the line to bring this gentleman in, was still reeling from the shock and the look on the face of our CEO made his desire to eviscerate me amply clear. In this instance, except for some ruffled egos, no permanent damage resulted from my inopportune directness. It could have been a lot worse.

It is through such avoidable mistakes that many of us learn the nuances and subtleties of doing business. In this particular instance, our chairman — luckily — did not confine himself to dressing me down (in private), but counselled me on what I had done wrong and how it could have been handled better, even while getting my message across.

I wish I could say such specific feedback and mentoring happens all the time in companies, let alone start-ups, but this seems to be the exception rather than the rule.

A common excuse in most start-ups is that “We are running at a hundred miles an hour, you just have to dive in and swim.”

So training, if at all, is mostly confined to a quick orientation session: “This is where the bathrooms are, here is where the hardware team sits and finance is over in that corner and oh, here’s your team and your desk. Good luck!” But it is in start-ups that we need to pay attention to mentoring.

The very word with its connotations of ongoing and consistent, if not continuous, investment of an already overworked person’s time seems such a luxury — which explains why most of us fail to give mentoring its due. Big mistake! Particularly since start-ups, with a small group of people, try to hire the best, and that Linux guru or penny pinching accountant we hired are often worth their weight in gold for their technical skills, but are often just not fit for normal human company.

When you have taken the trouble to hire the best, you often find they have come with as large a set of challenges to overcome as they have key skills.

And if they happen to be fresh graduates, then you have your work cut out!

Who mentors whom?
You have resolved that mentoring is the way to go to take your company to the next level. Now all you have to figure out is who needs to be mentored. This may not always be an easy thing to figure out. A simple rule of thumb I’d suggest is that anyone who has moved into a new role, particularly if he or she is being promoted, needs to be mentored. While this is true even for lateral moves such as the engineer who moves into marketing or the finance guy who wants to move into sales, all individuals you hope to grow into a leadership role have to be mentored. Lest you groan loudly or at the very least roll your eyes at the thought of all that overhead, mentoring, while very important, if done right need not be a major time drain.

Who should do the mentoring?
Conventional wisdom (or if we are to believe Hollywood) paints a mentor as middle-aged guy, greying if not balding, teaching the young buck a thing or two. Experience matters, not just to be knowledgeable, but for credibility as well. Such experience could reside in a young but proven manufacturing supervisor who has managed a unionised workforce, just as easily it could in a white collar vice-president of engineering. So knowledge that stems from direct experience, a willingness to share and patience are key attributes that a mentor should possess for the whole mentoring programme to work. It certainly helps if the mentor is well thought of in the organisation and experienced in multiple domains if not in multiple departments. Many a time, a mentor may come from outside the organisation — for instance, an up and coming woman manager may only find a mentor who has both the experience and empathy outside her company. An executive staff member may look to a member of the board for guidance and mentoring. The key to successfully mentoring your future stars is for such mentoring to be sought by the employee rather than it being prescribed like medicine! Of course, your actions and culture will have a good deal to do with whether people seek such mentoring.

How do you mentor?
In one word, gingerly. Mentoring has far too much in common with parenting, most of all in that there are many ways to mess it up, calling for therapy for all concerned! As this has not stopped us from having children, clearly it is not sufficient cause to avoid mentoring.

Albert J. Bernstein and Sydney Craft Rozen in their book Dinosaur Brains – Dealing with All Those Impossible People at Work talk about the rules of a mentoring relationship. They advise prospective mentors to think in terms of a contract and ask “What would you like me to do,” so that a mentoring relationship doesn’t fall into a parent-child role or a courtship role in the case of people of opposite genders. As a mentor, they warn, if you don’t consciously think and state your expectations, you may end up with vague emotional ties that result in anger or guilt from unmet expectations.

Once all the parties have stated their expectations, mentoring can be a very enlightening, fulfilling and rewarding experience. For practical reasons, it is important to have some regularity (monthly, quarterly) to your interactions and sustain these meetings, whether in person or on the phone, even when there seems to be “nothing” to discuss. Being available in times of crises certainly helps, but there is a fine line between being helpful and becoming a crutch, that you should not cross and must monitor to keep both of you honest. Asking questions, open-ended ones at that, is a sure fire way to do this, rather than providing the solutions that you know will work.

Mentoring Successfully
If mentoring at times seems like crossing a minefield, you need only to talk to parents of adolescents to know you have the easier job. With all the energy and emotions that need to be expended, mentoring, when done well, pays off in spades. Otherwise, every one of your promising employees is learning all the lessons the hard way. Mentoring with its real life coaching, the occasional nudge and shove will make it a lot less painful and a lot more productive. The hard part of mentoring is resisting the urge to act yourself when decisive action is called for; for the person being mentored, these are the best opportunities to learn, so allow them to do so by cajoling, pleading or where required threatening if plain old reasoning doesn’t work. The harder part is knowing when the bird is ready to leave the nest and providing the autonomy and respect for them to do just that. Mentors who can do that are the ones who are truly successful.

This article first appeared in the Hindu BusinessLine in August 2008.

Is a Board of Advisors important for a startup?

August 24, 2008 / Sri Srikrishna / 0 Comments

Photo: Esthr via Compfight

“I am trying to hire a CEO for my manufacturing business. If I give him equity, what should I do for my existing GMs?” One of my early-morning jogging partners shot this at me recently. Mine was a group of men, all in their early- to mid-forties. Many members of the walking (some ambling) group run their own businesses. Many a morning, we end up discussing the challenges someone in the group faces that week.

It surprises me to see that many firms lack a truly functional board of directors or, at the very least, an active board of advisors, though they have become reasonably successful. Each of these firms fulfils the mandatory requirements for the appropriate number of directors and periodic board meetings and minutes—often honoured more in the breach than in the observance. Ironically, this state is probably truest in entrepreneurial firms that would benefit the most in having such a functional board of directors or advisors.

Many entrepreneurial firms start off as proprietorships. They do so for a number of reasons, which range from the simplicity of the business to a founder feeling uncomfortable having partners or other equity owners. As the business grows, the more successful ones—even while staying private and closely held—end up having additional partners, external investors or employee shareholders. The ones that go public are beholden to a new set of statutory and practical rules of operations. However, proprietorships, partnerships and most limited companies are run far too long with little external help or advice, let alone oversight, that a well-constituted board of advisors or directors can provide.

Company Law and the law of the land recognise, empower and hold responsible the members of a company’s board of directors, to stringent legal and statutory criteria; for all intent and purposes, it doesn’t recognise any locus standi for a member of the board of advisors. For this very reason, people who don’t want to deal with the legal liabilities of being board members may be open to being a member of a company’s board of advisors.

The reason why am I so bullish on a board of directors or advisors is that I see a board playing the same role for a company that a good mentor would play for an individual. In other words, it acts as a sounding board, an experienced hand to guide through the shoals of business and someone to keep honesty intact.

In the case of my friend who wondered whether to give his CEO-candidate equity in the company; and if so, how to structure the vesting or earn-out of the equity, and how to handle equity to his current general managers, he sought help from us, his peers, as well as an HR consultant from the local management institute. Consultants can bring value with their external viewpoint, domain expertise and articulate the options available. But they do this with little context about the business.

On the other hand, a board member would have the larger context of a business, the history of the key staff and the challenges the business faces. So, when they bring their expertise of having seen and handled equity structuring in other companies and make recommendations, they do so within the specific context of your business.

Such a context may include constraints that one has, commitments one has already made, and contributions other long time employees have made. They may also understand the blind spots, prejudices and weaknesses, and be in a position to champion a course of action in a far more an effective manner than a consultant.

As business operational heads, most of us don’t think twice about seeking external expertise, like hiring an IT or a PR consultant or an intellectual property lawyer. We would be better off constituting an operational board of advisors, who can not only bring in such subject-matter experts, but can also provide a sustained, steadying hand over time to our businesses and ourselves as leaders.

This article first appeared in Outlook Business in August 2008.

Hiring for a startup

August 12, 2008 / Sri Srikrishna / 0 Comments

From my latest article, the first in the second phase of the Start-up Logic entrepreneurship series in the Hindu BusinessLine.

Her father is in the lobby, waiting to meet you,” I was told. I wasn’t sure I had heard right, so when I stepped out into the little passage that served as the “lobby” of our start-up, there was indeed a gentleman, probably in his late fifties, waiting there. Granted it’s not every new employee’s father who travels 2,000 km to meet her prospective employers, but as a start-up you should expect the unexpected. More importantly, be prepar ed to do the unexpected to find, hire and retain the right people.

Read the rest here.

Mentors – why we need them and how do you find them?

July 1, 2008 / Sri Srikrishna / 0 Comments

Photo Credit: Bindaas Madhavi via Compfight

The day I turned forty, it was as though someone threw a switch – I suddenly became incredibly smart! The reason I know this is ‘coz that’s when I realized, what an absolute idiot I had been for a great part of my adult life. Since then, hard as it might be to imagine, I think I am growing smarter still, as I continue to unearth stuff that had been staring me in the face, but I had obviously chosen not to acknowledge let alone learn from it. But then again, as the old adage goes, “If youth knew or age could…” the world would be a different place. One of the reasons that I made it this far without constantly tripping myself, is because I was singularly lucky in having a series of incredible mentors, who coached me, encouraged me and where needed placed a firm boot on a rather well endowed portion of my rear!There’s a whole another series of posts required if I begin with my earliest mentors (my materal grandfather and paternal grandma) – so I will skip them in this one and stick with my professional mentors starting with the most recent ones. Before I wax eloquent, let’s step back and try to answer some basic questions.

access and availability, no axe to grind and
real-world experience are the key criteria
for someone to be a good mentor

Who is a mentor? The dictionary, as always has something to say about this – “A wise and trusted guide and advisor” – in other words, someone you trust and knows more than you (if you are like me, nearly anyone else) can be a mentor. In my view, availability and access, no axe to grind and real-world experience are the key criteria for someone to be a good mentor. In hindsight, I have been surrounded by such folks.

What does a mentor do? A mentor often advices or cousels you. But there’s more to it than that. A lawyer advices or counsels you. For instance, she can tell you the pitfalls of doing a certain deal a certain way. However, while you may learn about your options and their consequences, you are not necessarily in a better position to make the right decision. A mentor focuses more on the HOW, than the what, you do something or get something done. He ideally teaches you and guides you while you learn something by doing. In many ways its apprenticeship by the hour or the minute! Any good manager of yours can tell you what options you have or the consequences of, confronting a critical but intransigent team member. Your mentor will show you how best to go about it, to achieve the desired result at the least emotional and business cost to all concerned!

A mentor focuses
more on the HOW, than the what,
you do something or get something done

Why do we need them? Simply put someone needs to keep us honest – hold up a mirror to us and not let us get away with taking the easy path. Advisors, experts and professionals can all augment and make up for any gaps in our competencies or domain knowledge – however most times we hire them for their services (inputs) but retain the prerogative of whether to act on them or not. A mentor need not be different – but a good one will be, in that they will ensure [a] that you act and [b] that you act in enlightened self interest – the greater good so to speak. There will be times, regardless of our job role or even in our personal lives when decisions will have to be made, and the people you’d usually consult themselves will be stakeholders in the decision. In such an instance you’d want to go to someone else whom you trust but is not a stakeholder. Of course finding such a mentor, unlike looking for the flashlights after the lights go out, is best done before you need them.

someone needs to keep us honest –
hold up a mirror to us and
not let us get away with taking the easy path

Mentors can be people who are already in your personal and professional lives. That way the trust and relationship already exists and if there is mutual respect, familiarity need not prevent the necessary candor for successful learning and growth. Chandrasekaran, the chairman at my first start up, despite having been a somewhat formal advisor in my previous stint at Sasken and subsequently becoming a good personal friend, served as one of my mentors. Whether handling things in my personal life (now you know who’s responsible for the mess! NOT!) or intransigent customers (I am sure you have never faced this!) and most importantly in learning and I hope, mastering cash flow management, Shekar was an invaluable mentor. Similarly my partner in crime, co-founder and CTO Baskar (who’d be embarrased if he read this not merely ‘coz he’s decade(s) younger than me) talked me through so many self doubts (what? I never have any) and showed me the true meaning of unflappable (I have it written down somewhere) that he has been one of my subtlest mentors yet.

Mentoring can happen in a nanosecond, as in when Mr. Raghavan our angel investor, told me “Go for it – only when you take risks you are going to make things happen and learn” as all of us were agonizing over entering the retail business. And it may happen over months or years, as I realized has happened with my dad and me. And any number of ways in between – the only definitive is that you will be a better person for it.

So stop reading this, recognize the people who you’ve already been mentored by, call ’em up and thank ’em. If you can’t think of any, what are you waiting for – go out and get yourself at least one.

Back to Basics – Entrepreneurship

June 30, 2008 / Sri Srikrishna / 0 Comments

Photo * ismail * via Compfight

Much like riding a bicycle or swimming, with entrepreneurship too, no amount of study or theory can take the place of plunging right in. Yes, some scraped knees, water swallowed and spat out and wounded egos are likely to result, but nothing helps you learn like real-world experience.

Over the past several months, I have tried to walk through a typical, if there is any such thing, life cycle of an entrepreneur. From when the thought to start something first lodges itself in your mind through all the way to exiting your business, the entrepreneurial journey is a roller-coaster ride on steroids. As happened with me, and every parent prior to me, you are clueless when people tell you, “Your life will change once you have children.” They could just as well be talking about being an entrepreneur. All the reading, talking and thinking does not prepare you for it — it’s messy, sleep-depriving, unpredictable and will make you want to cry! Yet, it is is exhilarating, scary and fun all at the same time.

Better men and women than I have written oodles about entrepreneurship and start-ups — the how-to, why and wherefore and the blogosphere is a cacophony of advice givers. So is there anything left to say? My two cents is that it is certainly worth repeating the basics, the foundation on which all endeavours entrepreneurial and otherwise rest and build on. And this is what I shall strive to do in this article.

What: It’s the Journey

My accountant used to tell the tale of how, when a youngish man passed away, his brother standing by the funeral pyre had a flash, a rare moment of insight about how ephemeral life is and how trivial most concerns that dog all of us are. Yet, an hour later when he returned home, he chided his wife on how cold the coffee she served was! It is hard enough to be receptive to the flash of insight and nearly impossible to stay in it every moment.

Yet, as an entrepreneur (or as a parent or spouse), it’s worth reminding ourselves that we should accept, internalise and live the truth, that ‘It’s the journey that counts’.

Many of us fall into the trap of posing most issues as an ‘either-or’ situation. If you are not striving, you are complacent (not content); if you aren’t successful, you have failed; if you aren’t paranoid, you will be dead!

Reality, however, tends to be a lot more nuanced, filled with shades of grey rather than just black and white. If we succumb to it, there are endless ways to pull ourselves down even without competitors or sometimes customers doing it. To what most people would say such as “Keep an eye on your goal at all times” (which you should), “Stay focused” (which you should), “Persevere (beyond reason),” my recommendation is to remind yourself each day that “It’s the journey that matters.”

For even if you get where you (think you) want to be, if you don’t enjoy your trip there or worse yet, you don’t get there, it would all have been a waste.

So, write it down, post it on your desk; better yet, make it your screensaver!

Who: It’s the People

No journey is much fun if you have to do it all alone. Of course, having obnoxious, inconsiderate or downright horrible travel companions is probably the only thing that is worse than travelling alone. Entrepreneurs by nature like getting things done and if you are like me, many times, you’ll have the feeling that no one else can do as good a job as you can (not true). So taking on a partner or hiring and training employees will all, at times, seem far more trouble than it is worth, but no enterprise worth its salt has been built by one person, however heroic — even Superman needed Jimmy Olsen ever so often.

The trouble, of course, with people is that they are people, with all their foibles and baggage, social and emotional. Peter Drucker in his book The Effective Executive speaks of making strength productive by not hiring to minimise weaknesses but to maximise strength. He narrates how: ‘President Lincoln when told that General Grant, his new commander-in-chief, was fond of the bottle said: “If I knew his brand, I’d send a barrel or so to some other generals.” Lincoln assuredly knew all about the bottle and its dangers. Lincoln (however) chose his general for his tested ability to win battles and not for his sobriety, that is for the absence of weakness.’

Paul Hawken, entrepreneur, raconteur and teacher, speaking about the people you want on your team, says “… it makes no sense whatsoever to hire any but the best people you can possibly find. Your employees shouldn’t admire you. That is kid stuff. You should admire your employees.” So make sure you don’t travel alone and that you pick your travel companions carefully for their strengths.

How: Don’t forget to have fun

At least three thesauruses that I consulted report the words fun, joy and playful as synonyms. And who am I to disagree with them? Neither should you!

Business, commerce, entrepreneurship — all sound like serious stuff and all too often we treat them that way, but high cholesterol, hypertension and stomach ulcers are a lot more serious. So having fun, being joyful and keeping work playful is important. The real world in the form of payroll, accounts payable, demanding customers and disgruntled employees make it hard. It is the rare business that manages to accomplish this without ceaseless vigil and trying hard. While we may take our business seriously, we had better not take ourselves too seriously. I will be the first to admit that this, like most good advice, is easier said than done.

Nevertheless, the baristas at Starbucks, the concierge at the Windsor Manor hotel in Bangalore and my local barber all live the maxim that work can be fun! There will be enough folks telling you how to do or not do stuff or why you will fail. The easiest way to have fun is to prove the naysayers, who will be coming out of the woodwork daily, wrong. The best revenge at all times, I believe, is having a good time.

So focus on making sure that the journey for the folks travelling with you and for yourself is fruitful, fun and fulfilling today, and other things will take care of themselves.

This article was published in the Business Line print edition dated June 2008

Exiting your business

June 16, 2008 / Sri Srikrishna / 0 Comments

Photo petervanallen via Compfight

Whenever I read of a prenuptial agreement, I react viscerally. Not that I am particularly romantic, nevertheless there is a sense of foreboding. Putting in place an agreement should the relationship fall apart, even before the marriage, seems unsettling to say the least. In the Indian context, where marriages are still largely arranged and families actively contribute to heal rifts (and in some instances serve as the source), there is no major downside to a pre-nuptial lack of preparation. However, in the case of entrepreneurial businesses, even those that plan well before starting up, often give little thought to how it might end.

As an entrepreneur, you conceived a business idea and shaped it to meet a large market need. With love and, at times, feelings bordering on hate or insanity you have nursed, nurtured and grown it to a stage where you now have a reasonably stable business. Along the way, you have brought on board employees, partners and other owners who have ridden the enterprise’s roller-coaster ride with you. You are just getting accustomed to the growing pains (which only seem to change and never cease) and look ahead to what’s next. Of course, even if you are not there yet personally, your employees, investors and likely, your spouse are pushing you to figure out what’s next.

I use the term ‘exiting your business’ for this phase of your business. It may involve an actual exit, such as selling your company or even shutting it down or a major change in shareholding (which I deem a virtual exit) such as going public or a significant dilution of equity, ideally with some financial upside for the present shareholders. If you are not hyperventilating by the end of the previous sentence, you are ready to consider what the best manner to exit your business is.

Are there alternatives to exiting your business? Indeed, there are. You could choose — as many of the companies described in Bo Burlingham’s book Small Giants have — to stay privately held and of finite size. This has its share of challenges including the growth path for your senior team members, monetisation of people’s equity and succession planning. As Bo Burlingham puts it “(You will face) the same choice that all successful entrepreneurs are faced with sooner or later, although most don’t realise that there even is a choice until it’s too late.” So how do you ensure that your exit is smooth?

Know thyself

As with starting a business, exiting a business begins with understanding yourself. The good news is that you are no longer the person who started your business. Therefore, what you want today is likely to have changed. Even if you feel it hasn’t, it’s well worth being certain.

Begin by asking yourself: “What is it I want?” Do you want to grow the business to many times the size it is? Do you merely want to cut back on the hours you are working? Do you want to hand the company over to someone else and not be the person with whom the buck stops? Are you capable of letting go? Would you drive your spouse and family batty if you were no longer an entrepreneur here? These questions are all valid regardless of whether you intend to go public, sell the company, shut it down or raise another round of capital.

A recent example of not being clear is when Bill Gates stepped aside to let Steve Ballmer, his college buddy and confidant of decades, take over the number 1 spot at Microsoft. An article in The Wall Street Journal reports that there were shouting matches and even a dramatic walkout by Gates after an argument. According to the paper, these run-ins “paralysed business strategy decisions that the company still wrestles with today.” Eventually, as another commentator observed, “Mr Gates had an epiphany about his own role and stepped back.”

Before you make plans to exit your business, it is important to recognise that most exits are beginnings rather than endings. For instance, if it involves selling your company and you are no longer going to be involved, you’d have to figure out what you would want to do; more importantly, you would have to be clear about what would happen to your employees with you out of the picture. If the buyer wants you to stay, what will your role be and how happy are you going to be in it? How long should you stay? If you are taking the company public or taking in equity, how will having a formal board of directors impact your business or you? And if you are going to shut down your company, what is the fair thing to do by your employees? Most importantly, when do you walk away from any transaction? In other words, what are you not prepared to give up? Ideally, you run through this exercise annually rather than the night after you receive a call about a possible merger or acquisition.

Exit is a project

In the early days of your business, you probably prided yourself on the speed with which you made decisions. And as an entrepreneur, you still have a disdain for all things that seem to slow you down. If so, be warned that exiting your company is a Project with a capital P! It requires serious chunks of your time and 100 per cent of your mindshare at such times. You should run it as you’d run any major project — it may turn out to be the most critical one in your professional career.

In crunch times, most of us revert, almost atavistically, to our native comfort zone. Leaders who come from a sales background view this as a sales deal, technical folk as a test of their technological capability — in other words as a specific challenge from outside that needs to be dealt with aggressively. Usually, the biggest and most non-trivial challenges of an exit lie inside the company.

The communications and people aspects of an exit — from company intent, “Why are we raising money?” or “Are we in trouble?” to the personal, “Will I keep my job? Should I be buying those vested options?” to a possibly critical “Do I want to bother my boss with this minor issue in the midst of all this?” are critical. Your team may not only have a lot of questions but may also be quite distracted, which is not good for the business or the exit. Therefore, having a clear plan, that includes entry and exit criteria (such as when will this project be killed, if at all), objective targets (“What do I consider a fair share price?”), milestones (“By when do we intend to conclude this, either way?”), roles and responsibilities (“Who does what and how?”) and continual tracking (weekly meetings, daily or alternate day calls) is vital.

Regardless of how hard you think the exit project will be, it will be harder still! So get professional help. It is useful to have the buffer of a professional intermediary, who’ll be objective and ensure that the process does not get derailed and keeps you honest. And be prepared to pay them — they’ll earn every dime if you pick them well.

Business as usual

All of us have been in situations when, even as a key customer meeting is running late, we get a page saying that a top technical guy has resigned and our alarm reminds us of a promise made to the little one not to miss her school play again. As we race madly from the meeting, the fuel indicator glows red and the accountant calls to say that the wire transfer has not come in and tomorrow’s payroll is at risk. Now imagine doing all of this while your spouse is not in town, you have a head cold and a twisted ankle. Trying to manage an exit even as you run your business is all of the above and then getting pulled over for speeding by a surly cop.

It is easy to lose sight of the fact that you have a business to run, especially if you find the exit project exciting and exhilarating. But it is important to keep in mind that by the time the day of the IPO or the selling agreement arrives , you had better still have a viable, vibrant business. And this will not happen by itself. When you are sitting across the table from your institutional investors or prospective buyers, it is this healthy business, running as a well-oiled machine, which is going to allow you to be a cool yet formidable negotiator. It is useful to keep in mind that the exit project is just that — one of several in your business and not necessarily one that will be successful.

So keep your eye on the ball and remember your core objective — sustaining and running your business as though you intend to do it for the rest of your professional life!

This article was published in the Business Line print edition in June 2008.

Selling every moment – sales in an entrepreneurial firm

June 2, 2008 / Sri Srikrishna / 0 Comments

No one looks forward to a visit to the dentist, especially if it is a root canal that’s in the offing. Yet, most people would choose a root canal over haggling with a car dealer. The words ‘used-car salesman’ have come to epitomise our loathing for the selling profession. The sweet-sounding young thing who keeps calling offering me credit cards and personal loans, is most reluctant to answer when I ask her if it is a sales call. So it would appear even salespersons are at times ambivalent about their jobs.

In this scenario, how important is the sales function for an entrepreneurial firm? Before we answer this question we need to recognise that most entrepreneurial firms begin selling before they have a product and many even before they are a company.

As a founder, you have to sell your ideas to other founders, prospective employees, potential investors and future customers. Often, we fail to acknowledge this as selling as our passion and vision drives us to make believers of others. Selling, however, is what it is and it is critical for the success of your entrepreneurial firm.

Furthermore, it is far too important to be left to the sales folk alone. You need to be selling your company to all the stakeholders, selling your product and its differentiation to your own sales people and selling to customers and partners your unique value as a supplier and partner.

Founders as sales people have their share of risks — they are too close to the company, its products and their perceived benefits that they may not hear too well what customers are telling them.

As a start-up evolves to be a real business, the need to bring in professionals for the sales function grows. Salespersons spend most of their time outside the company and ensuring that they are aligned to your vision, values and goals is a continual process. If your sales people are to win hearts and minds even as they rake in the dollars selling your products, it is important that you stay involved after you bring on board the right salespeople.

Much like customer support, they will be the face of your company and the less they are perceived as ‘used-car salesmen’ the better you will be served.

Selling process For a company’s sales team to be consistently successful it requires a clearly spelt out process for selling.Many companies discover that writing code or building a product is all too easy to get started without adhering to a well spelt out process. However, disaster in the form of poor products or, in the worst case, a shuttered company, is the likely outcome in the absence of such a process. Similarly, too many start-ups think about sales, if at all, late in the game. Even when they plan for it, they grossly underestimate what’s required and make erroneous assumptions such as “the product will sell itself” or marketing or the technical personnel will be able to sell it. However, to continuously, predictably, and most importantly, profitably sell your product you need the right professionals with the right tools and a strong selling process.

The most common tool or process in sales, be it multi-million dollar selling to major accounts or one-on-one retail sales, is the Sales Pipeline. Simply put, it is a series of steps, such as figuring out who your likely customers are (prospect identification), which of them have money to buy, are likely and desirable (qualifying the buyers), and understanding what need they are trying to fulfil (understanding needs).

The accompanying table shows one such sales process; your own may have fewer or more steps depending on the nature of your business. Even in a restaurant or store, good salespersons go through this process, figuring out which customers are browsing as opposed to buying, what it is they are looking for, is the wife or the friend the decision maker, can they up-sell you with accessories (or appetisers or drinks in a restaurant), negotiating price and closing the deal.

However, in high complexity sales such as technology products or high-value selling, the time taken between the first step in the sales process and the order closure may be several weeks to months. And, when you have many such prospects and sales deals in the air, without strict adherence to the process, your survival will be in question.

The term pipeline is used to refer to the sale process, as the sales organisation will aspire to continuously move customers from the first step (identification) through the last step (payment receipt and asking for referrals). At any time, a good sales organisation will have a number of different prospects at each stage of the sales pipeline. Ensuring that the pipeline never runs dry and that a bottleneck is not created at any stage (proposals or negotiations for instance) is critical for predictability and sales success.

Daily discipline Selling, in my view, is the most unforgiving of all jobs in that it requires a level of daily discipline and commitment that few other jobs require. In engineering or marketing you can afford to have an off day; put something off for tomorrow or next week. However, in sales, the consequences of putting something off for tomorrow or next week are often disproportionate and tend to last longer. For instance, when you don’t call on that new prospect you had intended to or make that follow-up phone call about your proposal, that’s when that key decision maker goes off on his six-week sabbatical or your client has an organisational restructuring or budget cuts! Though a good sales person bounces back from this setback, it may take another three-six month selling cycle before she has another shot at the account.

This is made worse by the fact that sales people face rejection every day — from prospects and customers who tell them why their competitors’ products are better and of course less expensive and, worse yet, customers who love the product and your company but they are not buying right now! One week in the shoes of any of your sales people is about the most sobering experiences any of your non-sales employees can have.

Successful salespeople attribute their performance to attitude, discipline and perseverance. The discipline they refer to is in how they manage their sales pipeline.

Typically, regardless of the number of steps in it, the sales pipeline is broken down into three segments. Segment A – those accounts that are nearest to closure, Segment C – those that you have just started working on and are still in the early stages and Segment B — all those in the middle between A and C. Great sales people work their pipeline in the order A-C-B, spending maybe 20-30 per cent on A, 40-60 per cent on C and 20-30 per cent on B. Novices and less effective folk by focusing predominantly on A or A and B tend to let their pipelines run dry or at the very least become very unpredictable.

What time management people refer to as Quadrant II activities — namely the important but not urgent activities such as getting to know the decision making process or the decision makers — are typically Segment C activities. If like the industrial ant, you don’t work your C accounts on a daily basis, like the proverbial grasshopper you are likely to starve once the spring of A accounts passes.

Relationship building If you spend a week accompanying your top sales person, you will discover as one of our engineers recently remarked, “It’s not the product or even the sales pitch but the relationship and trust that the sales person has with the customer that brings home the deal consistently.” People like buying things from people they trust and like. Relationships, especially ones that engender trust, are not built overnight. This is the ultimate Quadrant II activity that separates the great sales people from the merely competent.

With today’s constantly evolving (and rapid obsolescence of) technology, products get rapidly commoditised and features contribute far less to differentiating your offering. So how do your sales people stand apart from the din of competing offerings? Recent selling research and literature talk about consultative selling. From the days when the pyramids were built, great salespersons have always been consultants and partners first. They strive to understand the real issues customers are trying to address and provide them the best possible solution within their constraints. That may, at times, even mean sending them to the competitor. No good deed goes unrewarded especially when a strong relationship has been built.

Those that have built good relationships are not only rewarded with more deals, but are less likely to be perceived as used-car salesmen or worse than a root canal!

This article first appeared in the Hindu BusinessLine print edition in June 2008.