As we set out to raise money – we learn a whole new vocabulary. Can you say “hockey stick?”
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“The VCR is not turning on!” says my wife over the phone. We often have short phone calls along these lines. At other times it’s the laser printer or the washing machine not working or turning on. My first question usually is “Honey, is it plugged in the wall?” followed by “Is the switch on the wall socket turned on?” Sometimes we find that the kids have used the electrical socket for something else and just unplugged our device. At other times they left the outlet turned off or forgotten to turn the UPS back on, after switching it off when it last squealed.
While I’m sure your spouse (or room mate or sibling) and you never have such conversations, we certainly have to thank William of Occam (also Ockham) who lived eight hundred years ago. His eponymous maxim (aka Occam’s razor) states “in explaining a thing no more assumptions should be made than are necessary.”
In other words the simplest explanation for any observed phenomenon is likely the right one. This is the reason when we show up with chest pains, they check for heartburn or gas first rather than rush you into surgery. As entrepreneurs, managers and leaders, we are often faced with issues that seem to baffle us.
- Why can’t I seem to hire anyone?
- Why didn’t that VC call us back – the meeting went so well, we thought?
- Why is the customer not prepared to commit?
- Why is the network slow?
- Why does our product crash often?
For most of theses instances, Occam’s razor is worth keeping in mind. Before you explore more complex reasons, look for the simplest ones first and those are the most likely ones.
Of course it’s worth keeping Einstein’s caveat in mind
“Everything should be made as simple as possible, but not simpler.”
If you’ve come this far, you might as well read what physicists have to say about Occam’s razor here.
My daughter and I began doing a business cartoon back in 2011for the Hindu Business Line. Given father’s day I thought this might be a good one to share. I’ll try to share one each week.
A question posted in the HeadStart Forum once again reminded me of how easy many of us find it to build the product first before figuring out how best to get customers. Having bootstrapped two startups and mentored several more, here are three tips on bagging the first (new) customer.
Your ex-employer if you’ve worked before you started up on your own, your ex-employer & ex-colleagues are the best place to start. They know you, hopefully don’t dislike you & you know how much money they have. They also likely can give you honest, even if not favorable, feedback on your product or service. Other than your mother, this is likely the most friendly reception you might get from a prospective customer.
Your ex-employer’s customers This is how I got my first break – when my employer turned down a customer who was deemed too small. I approached them with a request to be able to address their requirement and was given the go-ahead. This let me take the PO, a 30% advance and then start my first company, with a customer and cash in hand. Don’t hesitate to ask and don’t be surprised if your ex-employer and their customers are amenable to such an arrangement – as everyone prefers to deal with a known quantity.
Reference customer Visualize who’d be your ideal customer and more importantly the customer for whom your solution would be ideal. Strike a deal – such as a free trial or finite number of units or one [week | month | year] of free product or service – whichever make sense depending on what your offering is – in return for a strong endorsement or further references. So if Amazon India or Procter & Gamble or some other name brand or market/channel leader is prepared to endorse your product or service, it can open the flood gates to more customers. This requires you to be able to articulate your value clearly to your prospective customer and explicitly asking them for a reference.
Of course as with looking for a job or in the Indian context, looking to get married, it’s a good idea to let everyone you know, that you are looking for customers. So trade shows, your website, entrepreneur community forums, family weddings are all fair game to chase customers. While this is more likely to result in business cards and contacts, it will be ripe for the picking once you have that first customer. Happy hunting!
As an entrepreneur, you’ll find yourself having to negotiate almost as much as you have to sell. From landlords, to suppliers, prospective employees, partners and of course customers – you’ll negotiate often without even recognizing that’s what you are doing. While there are entire books written on the subject of negotiation, a few simple rules have served me well over the years.
Be clear about what you want Simple as it sounds, often we get carried away or worse yet upset and take a position or ask for something, which is really not what we want. Sometimes it’s as simple as that we were not clear going into a negotiation as to what it is we want. So when we actually get what we demanded and find that we are not happy, it’s not a good place to be – especially if you’ve burned bridges or needlessly cheesed off folks you’d have to work with. So don’t go into any negotiations without clarity on what you want – be it bringing on board a new employee, signing a new customer, re-working the terms of a loan or selling your company.
Know you walk-away price Be clear when you would not do a deal – this has to be black and white to yourself and can’t have any ifs or buts. And this need not be just about money, could easily be about the other terms. For instance, if you are selling your company and the buyer is not prepared to give the terms that you want for your team (for instance, employment guarantees or restricted stock) — a situation I’ve faced —you need to know are you prepared to walk away. Being clear about this makes the entire negotiation far less stressful.
Never negotiate against yourself This is by far the most common error all of us commit. We’ve all experienced it. Like when you see a jacket you like at a store – you ask for the price and find it too high. So you walk away – the shopkeeper calls after you – saying he’ll knock of 20% – he’s just negotiated against himself (of course he may have marked it up 40% 🙂 Particularly when negotiating a contract with a prospective customer, the temptation is great to lower our price or improve our terms when the customer feels we are not offering a good deal. Instead, it’s always best to ask the customer to counter your offer – let them quote a price that’s agreeable to them or terms that are more palatable. Now you have something to negotiate about – maybe you get nearer their price, but take something off the table (support, warranty, options) or you can counter with a different price for better payment terms. The important thing is that there’s got to be give and take and until the party puts a stake in the ground, don’t move yours.
Bring something to the table that you can concede All of us like a good deal – especially one that is done in a spirit of give and take. Just as we expect the other guy or gal to make concessions be prepared to make some of your own. This requires you not only to know what you want and what your walk away is, but what is NOT important to you. For instance, if you’re trying to close a large deal and having money up front is not critical for you, be prepared to give that up – the important thing is to ask for a thing or two, that you know you are prepared to concede and be clear which those are and which ones are non-negotiable. If everything is non-negotiable you are not going to get too far. And it makes the whole negotiation less than pleasant.
Save your best for the last Despite much advice against it, some folks and entire cultures conduct negotiations on a piecemeal basis – that is one item at a time. You discuss one point, make concessions and then they make their next demand. Refuse to do this politely. And the best way I’ve found to do this is what I term, saving your best for the last. In essence, establish what’s the critical care about for the other party (and yourself). Ask them, if we close on this item (whichever one it is) is there anything else that’s holding the deal back. If the answer is no, close on the other times. If they answer is yes, get down to negotiating to a close. If they pop something else up after this they are not dealing in good faith. Be prepared to walk.
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In a hat tip to one of my favorite bloggers Fred Wilson, who’s got a steady publishing schedule such as MBA Mondays, I’d like to share with you Tool Thursdays. While I’m no Tim Allen-like tool man, I find myself spending enormous amounts of time, than any job warrants, on trying out software and online tools. So I guess I must enjoy it. I reckoned I’d share some of these, so others who are looking to find tools for their small (or not so small) businesses may benefit. Hopefully I’ll hear from you and we can learn from one another.
About a year ago is when I first encountered Asana – a project management tool for the rest of us – or at least the Facebook generation. As someone who’s lived through dreaded Microsoft Project – I found Asana possessing the simplicity of the best to-do lists out there such as Wunderlist or Remember the Milk married with the life stream of Facebook. The coolest feature is that it’s free for up to 30 users in a project.
Asana has a very simple structure – there are Workspaces – think of them as different parts of your life or job. I have separate workspaces for each department I work with – within each workspace you can have as many projects as you’d like. Projects – began as simple to-do lists, with (all optional) an owner, description, due date. You can assign Tasks (or to-dos) to folks who are NOT on Asana and it asks you for their email address and invites them – you can confine such invitees to the task assigned or the entire project. You can also invite/assign followers for a task, such as other team mates. Once a to-do is assigned, the owner or any of the followers can comment on it, obviating the need for emails to multiple folks – within these comments you can (in the current version) insert twitter like @person, @project tags which helps folks in the loop. This life stream feature alone makes Asana worth using. While Asana doesn’t support dependencies – it allows you to make links to other tasks in projects – and these days allows sub-task assignment as well.
One of the nicest features of Asana (which could easily become irritating) is its email notification service (of updates, completion of tasks, overdue tasks) – however as you can update Asana by replying to these updates – everyone on the team or task gets to see the conversation thread without a zillion emails from team mates. Once you figure how best to manage the mail notifications, Asana truly becomes your friend rather than that nagging person you want to avoid.
Another cool feature of Asana is the concept of the Inbox for each project – so in case you’ve been gone a while or been busy with another project, you can start with the Inbox, which shows the updates for each project – without drowning across a variety of projects. Also it lets you see tasks by person (across projects) and tags all of which makes things quite manageable. The biggest advantage of Asana I’ve found is their Facebook like paradigm, for a life stream, so even the most technology averse person can get rolling pretty fast. While you may not manage the building of the next Boeing plane with Asana, for most projects we are likely to encounter it will do just fine.
Pros Simplicity, multi-user, free, email based management
Cons lack of dependency management and absence of Gantt views
For the power and price, the downsides are niggling. I’d run out there and try it.
Over the last three years, I’ve had the pleasure of working with entrepreneurs addressing a wide variety of markets – from those going after Tier 2 markets in India (music to consumers) to those selling tickets to an urban audience. One selling certificate courses on the internet to others changing how people consume online video or how local advertising is done. Still others running a real world adventure company to one that’s changing how power electronics will make solar energy more practical. Some have a single technical founder, others three or more – most had revenue and some were still figuring out revenue models. And luckily for me all had very motivated, smart and energetic founders.
As an advisor and in some cases as a mentor I’ve worked with these and other companies to help them navigate the shoals of early growth. The truth of the matter is that whether I’ve helped these companies are not, I’ve learned a great deal – besides having a whale of a time working with smart people. Here are three lessons I’ve learned as mentor. As with most lessons they are quite useful in most circumstances.
Do your homework – Most entrepreneurs learn about the markets that they operate in very rapidly, even when they are new to it. Often they dive deep and sometimes they learn just enough to get. So as a mentor before I’m ready to even discuss matters with them, I’ve found that I really need to do my homework, if I’m to engage in an intelligent conversation with them. Also this saves the entrepreneur a whole lot of time, having to educate their mentors first.
Ask questions – the best way to contribute is to ask lots of questions. Not in an interrogatory way nor because asking questions is easy. Asking questions is the best way to unearth assumptions that companies and entrepreneurs have made and often they may not be unaware that they’d made. Asking questions of course is a great way to both learn and identify issues and challenges. Often asking questions about what the entrepreneur wants and their motivations are is more critical than confining the conversation to the business alone.
Listen more – this seems self evident, especially if you are asking questions. However, many mentors having been entrepreneurs and particularly those who were trained as engineers are greatly tempted to jump right into seeking or offering solutions. This is a big mistake, one that I’ve made frequently. Asking questions without listening actively is a great disservice and a lost opportunity to contribute meaningfully. Listening actively is learned behavior which can become second nature with practice. Luckily this is a trait that serves you well whether with your spouse or as in my case, teenaged children.
Do your homework, ask questions and listen more. Seems as simple as that great formula – eat less, exercise more. Much easier said than done. So let’s get started today.
Recently I had to travel to Bhimavaram in West Godavari district of Andhra Pradesh. Of course I had to look it up on Google Maps to figure out where it was. It’s about a 120km north northeast of Vijayawada. As my daughter had to be there at 9am on a Saturday morning and had forgotten to tell me but five days before, I had to scramble to make the arrangements. Now that I’m back in Bangalore I realize somewhat belatedly how everything we needed was handled almost a 100% online.
The Economist in its latest issue talks of Indian technology firms and where they may be headed. While I didn’t agree with everything they asserted, my own experience of making it to Bhimavaram and back resonates very well with their core premise that technology, the web and mobile have already changed Indian businesses irrevocably. Here’s what I found and learned.
Google – of course this is where it began – with Google Maps figuring out where Bhimavaram was and the nearest airport – Vijayawada in this case. Cleartrip was my next stop to check out airline tickets. Once I found Jet Konnect had the best connections checked out their website as well and bought the tickets there directly. Usually when travelling to a new city, I’d call friends, to see if they had any recommendations for hotels. Given I was travelling with my daughter, I checked TripAdvisor for reviews and everyone seemed to suggest the Taj Gateway awas the way to go. So off I went to TajHotels website. Then I had the bright idea to check hotels right next to them – as in centrally located by not as expensive. I decided to check out Stayzilla who’s ads I’d seen in Bangalore – and they got me a good deal at the Taj Gateway. Then off it was to find a rental car. I called the Taj up and asked them to refer a cab company. Once again I felt the cab rates were quite high and so a quick Google search revealed a service called Saavari.com that fit the bill – they could get you a cab (including rates, ratings, the works) in practically any city – most importantly in Vijayawada in this instance. However, I couldn’t figure out a few things re quoted price online, so I called them on their toll free number. They said they’d get back to me and never did. So in the meantime I kept searching and here’s where Google Local came in real handy. Several cab companies in Vijayawada had excellent reviews ratings on Google and I reached out to one of them over the phone after checking out rates on their website (which I’m finding hard locate just now). So here we were four days before our travel, with flight tickets, hotel bookings, local taxi rental all done over a couple of hours online and on the phone – to a city we’d never been to, whose language we did not speak and with some measure of perceived safety for my teen traveller.
Lessons learned
- Online reviews matter – the hotel we ended up staying in had good reviews on TripAdvisor. The cab we used had good reviews on Google local. These were instances of a local supplier beating out a larger national “professional” supplier. Social and community word-of-mouth is getting better, even it’s not from someone personally known to us.
- Websites matter – Even after locating the cab company via a review, the fact that their website had clear rates, reviews and contact info is what tipped us over. Good websites matter – Savaari.com and Stayzilla I had to look up in my mail trial as I couldn’t recall their names – and in the formers’ case I couldn’t figure out the pricing and latter’s case I had to resort to the phone to resolve issues.
- Customer service matters – Saavari.com said they’d get back to me and they never did. They had a beautiful website – clean and while my use case was not a clear fit to their standard offerings, phone calls were not returned. Similarly Stayzilla called me back to say that the Taj Gateway room was no longer available – that they’d put me in an another hotel on the same street. To give full credit to them, they constantly followed up but were caught scrambling. The place they finally got me I passed on due to poor reviews on Trip Adivsor. Jet Konnect won over ClearTrip as it was easier to cancel or make changes with them.
This was the first time that I travelled to a new city – let alone a Tier 2/3 town – without seeking direct personal inputs from friends or family and did so at short notice and had a uniformly pleasant experience – despite not speaking a word of Telugu in this instance and carrying minimal cash. Whether web and broadband penetration is where we’d like it to be or not, for businesses the web and mobile have changed how they do business forever.
Growing up, I recall my father gifting things to folks – in what I deemed – a reckless manner. There was time when someone admired my father’s wristwatch and he took it off and insisted that they take it. My sister and I argued with him, not just on that occasion but on several others that he was being taken advantage of. Of course his response was that there’s as much pleasure, maybe even more, in giving as there is in taking. My sister’s immediate offer of making him ecstatic by happily taking any and all gifts that he planned to give in the future, I don’t think was taken seriously.
Yet once I hit my teens, I became aware that whenever my father lent people money – particularly to a steady stream of strangers, often referred by relatives – for a family exigency or to buy a motorcycle or to go abroad to study, he always insisted that they sign a promissory note or pro-note as was called. This was usually a letter on plain paper, stating the amounts borrowed and the borrower’s intent to return the sums upon demand or by a certain date. The borrower signed it across a revenue stamp pasted on the paper, making it a legal contract. This was in marked contrast with how he handled grants at the small non-profit he ran, which usually gave money directly to elementary, middle or high schools for kids who needed financial help to pay their fees or for books. These grants were just that and the beneficiaries, usually economically disadvantaged kids, were not expected to pay the money back.
So I asked my dad, why he took pro notes from these other folks who borrowed money from him. His response was that if he didn’t treat the money as a loan, that he expected the borrower to return, it diminished the value perceived by the borrower. While most borrowers intended to return the money, it didn’t hurt that there was a legal reason for them to pay off the loan. As my dad put it, “If they return the money, it allows me to lend it to more people who could use a helping hand.”
Ronald Reagan is credited with popularizing the term “Trust but verify” (or as the Russian proverb went “doveryai, no proveryai”). This was my dad’s own method to keep himself and others honest.
Yesterday I was part of a panel discussion on innovation and entrepreneurship at the opening of the Innovation and Entrepreneurship Development Center (IEDC) at the Dayanand Sagar College of Engineering. One of the first questions the moderator posed was “How does one create a culture of innovation and what role does leadership play?”
To me this is not that different from the question, How does one create a culture of ______ (fill in the blank) – for instance courtesy and consideration. You start by being polite – kind and courteous. Similarly creating a culture of innovation within our companies, divisions or teams is to start by being innovative. What does that mean?
To me it means three things
a] INSPIRE Talk about, share and celebrate innovation – set aside time, whether a Friday lunch or before your weekly team meeting to show what you mean by innovation. Bring in a mechanical water sprinkler and share with your team why you think it is innovative or better yet ask them what is innovative about it. A clasp on someone’s chain, a pain-free blood sugar measurement tool – in other words – “the ordinary” and the extraordinary that’s around us every day. Allows you to discuss and develop a shared sense of what is innovation and over the common misconception that only a cure for cancer can be innovation. Over time this can be things that your own team or company are innovated, but don’t wait for it to be done in-house
b] MEASURE Put in a process, where the team can spend time focusing on problems – which allow scope for innovation – could be in technology, internal processes or methods or any other function within your business. Intuit for instance created a process for employees to share ideas and seek inputs which has eventually become a product they now offer their customers. And most importantly put in measures — only that which gets measured will get done. So when you talk about it, ask about it, measure it, everyone begins to pay attention to it and that’s how a culture of caring about innovation gets slowly built up.
c] REWARD & RECOGNIZE Nothing works like recognizing the work people are doing and rewarding innovative behavior. A critical element here is not to celebrate success alone or what is commonly perceived as success – ie a new product that launches or a new idea that’s implemented, but to recognize and reward risk taking. Unless we create a culture within our companies of tolerating mistakes and viewing them as a way to learn and do better, it will be very hard to create a culture of innovation. As Gordon Moore, founder of Intel put it “I view this year’s failure as next year’s opportunity to try it again. Failures are not something to be avoided. You want to have them happen as quickly as you can so you can make progress rapidly.”
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