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Negotiating well in groups

The entire company, probably little over 50 people, was in the room. It was the 9th of December 2005 and we’d gathered to discuss the news that we were seriously considering an offer to sell the company. Nearly twenty people in the room had been with us more than five years – through two major pay cuts and one minor layoff – another 20 with us over the last two years, when it was certain we were no longer going to die. So the topic of the meeting and its consequences were not merely financial or professional but deeply emotional. If we chose to be acquired, our success largely lay in the hands of the folks in that room, in their willing participation and agreement to the decision to sell. Early in the meeting, we posed the question what would be your biggest fear or concern, should we sell the company.

As you can easily imagine when you pose such a question, to a large group of people, none of whom were at a startup because they were shy or retiring, things could easily degenerate into a free-for-all. Also while we had planned to take half a day for the meeting, there was a lot of ground to cover. So the challenge we were posed with was, how do we get the team to not only have their say, but to get them to converge on a few important things, such that the biggest concerns not only get aired, but acknowledged and ideally even addressed in the meeting.

Amazingly the 50+ people were able to converge on their three primary concerns and were unanimous with their first concern – “What would happen to our culture, if we are acquired?” thanks to a technique called Nominal Group Technique. And were able to do it within 15 minutes. This is a technique that I’ve had the opportunity to use repeatedly in groups, as small as 8 people to as big as 55, – to get rapid convergence – often from a standing start – of even what the key problems were that we needed to solve and what are the top 3 or 5 things to do to solve them. The technique requires that I write a whole another blog post dedicated to it to explain the manner in which we’ve used it, adapting it for different groups not just across countries but across age groups, and different socio-economic backgrounds. This morning I read about the a technique called Indaba, that was used at the recent climate conference (COP21) to get nearly 200 nations to sign-off to a binding agreement.

Negotiations are difficult by nature. Managing negotiations between 195 countries in order to arrive at a legally binding agreement, on the other hand, is nearly impossible. This was the problem that United Nations officials faced over two weeks at this month’s climate-change summit in Paris. To solve it, they brought in a unique management strategy.

The trick to getting through an over-complicated negotiation comes from the Zulu and Xhosa people of southern Africa. It’s called an “indaba” (pronounced IN-DAR-BAH), and is used to simplify discussions between many parties. Read the full article here.

If you reckoned negotiating with one party was hard, be it with an employee wanting to leave or customer or partner wanting more for less, negotiating with more than one party is incredibly more complicated. Luckily there are proven techniques that can help you do so successfully. It would be good to get acquainted with them, well before you’ll actually need to use them. Better yet, try ’em out today!

I’ve written about negotiating before here and conflict resolution here.

What do you do with THAT employee?

“He’s my best sales guy. He makes his numbers quarter after quarter! But everyone dreads it when he comes into the office.” My friend was on the verge of tears – it was clear that he was going to have to do something about his sales guy, if he didn’t want others to quit. But he was worried about his star salesman would react and he was not looking forward to it.

We’ve all faced this issue of what to do with that employee – the trustworthy finance guy, who upsets your team members often over trivial amounts; the brilliant technologist who cheeses everybody off with his superior attitude, or the HR manager, who despite the many years she’s been with you, who’s not pulling her weight any more. The timing is rarely right to confront them and the longer you put it off the worse it’s likely to get. We also worry about how we got here and how best to handle it so we retain them without too high an emotional cost. If you are like me, then you put it off for a better time, which rarely comes.

Hiring people is always one of the top 3 problems I hear managers or founders talk about. Implicit in this of course is that matter of hiring the right people. Yet, even after we’ve hired the right people, as neither organizations nor the people stay constant, we run into all kinds of issues. Gil Amelio, who was an inspiring leader (and CEO) at my first employer National Semiconductor, taught me a very simple framework to both talk about this and to aid action.

Effective v Attitude Matrix

Attitude and Effectiveness Successful organisations look at not just at proven capabilities and experience that would make a prospective employee effective, but also their attitude and fit with your organisational culture. He used the familiar four quadrant framework, with effectiveness along the y-axis and attitude (or cultural fit) along the x-axis as shown in the figure below.

Quadrant 1 – Neither the right attitude nor effective  These are the easiest folks to deal with – they are basically hiring mistakes you’ve made. Ideally you’d not have anyone in this quadrant or if you do, you’d fix your hiring process to minimize recurrence.  Lou Adler, author and CEO of the Adler group in his recent article titled “There Are Only Four Types of People — Are You Hiring The Right Ones?” terms these folks Type 1: Those you should never hire!

Quadrant 2 – Have the right attitude but are not effective Usually this is a sign that these folks are in the wrong job. They may have been effective, even in the same job, but no longer are, because the jobs requirements have evolved or they haven’t. Or you’ve placed them in the wrong role. The ineffective sales guy may bloom in a business development role or inside sales job. The trick is to find them a role that they can be effective in. If your organisation is big enough, you may have one or more such roles – sometimes the right role may not be within your department or even company, in which case its best to help them find the right role, whether inside or outside your company.

Quadrant 3 – Have the right attitude and are effective These are your stars – the people who perform consistently and lead from the front. The trick with these folks is to ensure that they are constantly learning and growing. Folks in Quandrant 3 can fall into Quandrant 2, when your company and your needs grow fast and they don’t grow as fast. These are the folks you want to be hiring and your company and its processes should be geared to finding, attracting, retaining and growing Quadrant 3 folks.

Quadrant 4 – Don’t have the right attitude but are effective This is the hardest group to deal with. The obnoxious sales person my friend had to deal with, the supercilious technologist or rude finance guy we met all fall into this quadrant. Two things make it difficult to effect change with these folks –

  • they are deemed successful and have been rewarded in the past, despite their interpersonal shortcomings.
  • They are often positions deemed critical, that make change not just unpalatable but downright scary. “What’ll happen to my sales, if this guy leaves?” or “Will I find another trusthworthy finance guy?”

Organizations suffer the most, because most of us don’t know how best to handle Quadrant 4 folks. The first step is to recognize not only the existence of these four quadrants but that people can move within the quadrants. This is most commonly seen from Quadrant 2 to Quadrant 3 (more effective) through skilling and occasionally to Quadrant 2 from Quadrant 3 (less effective) when the job needs grow and person doesn’t.

Effective v Attitude Matrix

I’ve found talking about the four quadrants and even mutually agreeing with your team members where they see themselves and where their peers or you see them helps immensely. This way when it is time to have the hard conversation, you both have a framework and vocabulary that can help keep the conversation professional. In my experience, almost always folks in the Quadrant 4 will have to be let go. We’ve had the occasional technical person build out their interpersonal skills and make the move from Quadrant 4 to Quadrant 3.

Let me know how this works for you.

Why I Tell Indian Entrepreneurs “Stop reading TechCrunch!”

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

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

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

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

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

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

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

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

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

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

5 Simple Tips for Successful Negotiations

Negotiation Cartoons: Positions Vs. InterestsAs 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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Share the credit generously – Lessons from my dad

Spotting someone you know in a movie’s end cre...

“That is what TTN has visualized.” I’d heard my dad say this so many times as I was growing up. TTN was TT Narasimhan, his boss – who relied heavily on my dad as his execution guy. In later years, my father took on the role of the CEO of two group companies and was left to call the shots in these and other businesses. Yet, in almost all public instances, my dad never did anything without indicating that he was only carrying out TTN’s vision. While not comfortable himself with any form of public praise, he was never failed to point out the contribution of TTN, when someone praised or credited him with any success. Even in the hierarchy and sycophancy-laden culture of India in the 70s, it was clear that it was something else that drove my dad.

I recall, once having a big argument (at least that’s how it seemed to me) with my dad, as to why he did not take credit for a lot of what were clearly his own ideas and doing. My dad gave me the indulgent smile he was wont to, when he felt I was being particularly childish or unreasonable. “Son, keep in mind, that all I’m able to do is because of the freedom and trust, not to mention the capital that TTN has provided. It’s in his name that we are borrowing money – that enables  us to do what we are doing.” He could see clearly that this did not cut much ice with me. “Even without all of that, there are two things to keep in mind son,” he continued. “It does take vision – not everyone can provide it. And giving credit to others does not take anything away from your own contribution.”

I can’t say that I was convinced that day. Several years later, when he had hired several PhDs in the research department of the pharmaceutical firm he was the CEO off, I saw this in action again. My dad had only graduated from high school, as his father’s death while he was still in 9th standard, and the family’s financial situation did not allow him to pursue a college degree. So here was a man, with no formal qualifications other than a high school diploma from a small town in  Tamil Nadu, who’d worked his way up from accounting apprentice through chief accountant to eventually CEO of two firms. “All credit has to go to our scientists for how well our firm is doing today,” was his constant refrain.

At my father’s funeral last year, many strangers came up to me and said “I was able to pursue college or go overseas only because of your dad.” So my dad’s exhortation to “Spread the credit” clearly had not undermined him in any way – his actions spoke loud enough.

This is a lesson that I’ve finally begun to appreciate and practice. Let me tell you about all that things that I’ve learned from Rajagopal….

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Getting your people to take ownership

This last week I made a mistake for a second time and paid for it dearly. A friend had offered to book a hotel for me and feeling lazier than usual I’d agreed. And when she sent me an email with the reservation I actually felt good, because she’d booked me in a fancy downtown hotel at bargain rates. Of course, only when I showed up at the registration desk did I realize that I’d confused my drachmas for dirhams. So the good deal in a downtown hotel, for what I thought was $100 a night, turned out to be nearly $400. But by then it was too late not just with the non-refundable booking but also on a long day after a long flight with the family in tow. I reckoned might as well have a good time. But I was in for yet another shock. The lady behind the desk had a most snarky attitude. “No! Breakfast is not included with your room. It is $30 per person.” “No, there’s no free wi-fi—$7 for an hour or $15 for a day. By the way that’s per device.”

A Stake in the Outcome ; Jack Stack & Bo Burlingham; Double Day, October 2003.

None of this rankled as much as her attitude that she clearly didn’t care how I felt and she absolutely felt no need to be even remotely polite. In contrast, the hotels that I’d stayed at the night before and the two nights afterwards, each cost well below $100 per night and offered free breakfast and free wi-fi (in only the lobby in one case and all over the hotel in the other). More importantly, both had extremely friendly folks at the front desk—who were happy to let us check in early, check out late and went out of their way to help us have a good time. And these were employees, who certainly were paid a whole lot less than my snarky host at the $400 a night hotel. My little one asked in the puzzled tone she uses when she doesn’t understand something, “Why did that lady have such a bad attitude dad?” And, of course, answered herself quickly, “Maybe she had a fight with her boyfriend!” What was evident to my 13-year-old was clearly not evident to the owners of this fancy hotel —not the boyfriend part but the fact that attitude matters. This lady with her snarky attitude did not only prevent us from enjoying our stay at $400 a night but made sure that we’d not go back there.

“I can’t just get them to take ownership.” How many times have we heard this refrain from managers or entrepreneurs? And how often have we voiced this sentiment ourselves? It seems like we all run into folks who can’t look at what they do to be anything more than a job. Something they do to make a living—put food on the table, pay the bills—and they can’t wait for 5 o’clock or the end of their shift, so that they can get back to their real lives. Sure we may use other words or expressions—“Doesn’t he have any pride in what he does?” and “I can’t seem to make them care about the company or customers.”

In his book, A Stake in the Outcome, Jack Stack, CEO of SRC Holdings Corp., talks about building a culture of ownership among the people who run a business and the critical role it plays in the long-term success of a business. The book builds on his own experience of taking the original Springfield ReManufacturing Corp. where he was a manager, from the verge of failure to a major financial success. The original $0.10 stock in 1983 when Jack and his 12 manager colleagues took over the business was worth $81.60 in 2001—for a return of 816,000% in 18 years! But that’s not the story. It is how all 727 employees own shares—not just some shares, the 722 newest shareholders own 64% of the business valued at $23 million in 2002. I’d run out and get this book for everyone on your team to not just learn how Jack and has team achieved this but to repeat it with your business.

Enhanced by ZemantaThis article originally appeared in the Book Beginnings column in Mint.

Put Employees First to Win More Customers

Hal F. Rosenbluth

Hal F. Rosenbluth (Photo credit: pennstatenews)

Waiters at French restaurants— maybe only at upscale French restaurants in the US—have a legendary reputation as unfriendly and at times downright disdainful. Of course, waiters across the social spectrum in India could easily teach their French cousins a thing or two about treating customers shoddily. And these are folks in the service business, where how you treat the customer is supposed to affect your business directly. Yet each of us can easily recount horror tales of poor customer service—be it with airlines, banks, call centres, retail outlets or telecom services—in practically every sphere of our personal lives. To be fair, customer service in India has come a long way since the early days of liberalization. The sheer choice of suppliers and healthy competition in the marketplace has done wonders to improve the manners of most frontline employees of service providers.

However, old habits die hard. A recent popular advertisement for a mobile service provider features a cantankerous old man who is bent upon ignoring, irritating or ill-treating his customers. And, as the Indian economy slows, the impact on businesses shows up first in the fraying edges of their customer interface. India is by no means alone in the decline. From the time of the Roman markets to the gleaming retail outlets of a resurgent Asia and gloomy malls of North America, customer service—good, consistent, delightful—has been a challenge.

Growing up in Chennai, I recall that nearly any retail store I went to had a small sign with a quote from Mahatma Gandhi. “A customer is the most important visitor on our premises. He is doing us a favour by giving us an opportunity to do so.” As with many other signs that dot the Indian landscape, such as No Entry—One Way Street or Do Not Spit or Cause Nuisance, Gandhi’s exhortation is “more honour’d in the breach than the observance”.

The service mindset has to begin at home. Indians, much like the Chinese and Japanese, like to pride themselves on being respectful to their elders. However, from our daytime soaps on TV to our overcrowded roads, thoughtlessness and rudeness, particularly towards elders, seems the rule. This behaviour just as easily spills into our malls and stores. If you’ve ever seen a parent admonish or worse yet slap their child at the supermarket, doesn’t it make you wonder how much worse they’d treat that child at home? Similarly, when you receive poor service from any professional service provider, you wonder—if this is how they treat their customers, how badly must they treat their employees?

Again, we needn’t wonder too long. Managers, at supermarkets certainly or even banks, don’t hesitate to dress down their employees right in front of the public. Many large Indian businesses, even when publicly listed, are often run as though they are proprietary firms where employee empowerment is largely absent. Multinational firms have succumbed to an Indian version of the Borgia families where politics and intrigue take much more of a manager’s time than advancing the business cause. However, as with every challenge that we face in India—and they are not only innumerable but often large—this itself presents an opportunity. An opportunity to provide exceptional service—to delight customers, differentiate a business and thereby thrive even in these difficult times.

The secret to achieve such exceptional service forms the very core of Hal Rosenbluth’s The Customer Comes Second. Co-authored with Diane McFerrin Peters, who works with Rosenbluth’s eponymous travel firm. His formula for creating an organization that provides exceptional service is to put your employees first and your customers second. Before we dismiss this as simplistic, it’s worth noting that Rosenbluth Travel has clocked more than $6 billion in annual revenue and has better than 98% customer retention. So clearly they must be doing something right. For the hard-nosed, what-can-I-actionize reader, the book offers specific tips and tools starting from finding the right people and training them all the way to using technology. Any book that talks unabashedly about culture and happiness in the workplace as this one does is a keeper and you should steal it from your nearest library.

This article originally appeared in the Book Beginnings column in Mint.

 

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Learning leadership from business & politics

Cover of

Cover of On Becoming a Leader

There are few things that have been written so much about and yet not understood well as leadership – okay possibly parenting, but that’s for another place and day. Stop the next six people you encounter today and ask them about their favorite leader and what it is that makes them a great leader. You are likely to get at last six different answers, possibly more. If we dig a little deeper we’ll also discover people expect different things from different leaders – as in what constitutes a great statesman, a successful business leader, a politician or a community or social leader. Whilst all this is natural and not unexpected, it is of little help for those of us looking to role models and to answer the question how do I become a leader and what should I do as a leader.

There is the common perception, quite widely held even in business circles, of an awe-inspiring, charismatic leader – gimlet eyed, firm jawed capable of making rapid decisions – sort of Churchill sans the cigar. Jack Welch of General Electric and Henry Nicholas, former CEO of Broadcom fall into this category of leader models. At the other extreme we have Bill Gates one of the most successful entrepreneurs of all time, who till a few years back was underwhelming at best in his public presentations. Yet the leaders we meet everyday – even the few that we admire seem to be cut from as many different types of cloth as there are men and women.

Closer home, few Indian business leaders have gotten the same measure of public exposure or attention that Bollywood, cricket or politics gets, for us to easily draw definitive stands on leadership styles. Politics by virtue of its very nature, throws up a large share of leaders, at least ones that get a disproportionate share of air time. Interestingly Indian politics, especially recently, has thrown up a wide and varied share of leaders – particularly women leaders – J. Jayalalitha, Mamta Bannerjee, Mayawati and of course Sonia Gandhi. Fewer groups could be as dissimilar as these four women and yet they command respect with vast swathes of people and wield considerable power. Their styles are as varied as the regions the cuisines of India are. Similarly, for the first time since Independence, men and women such as Aruna Irani, Kiran Bedi and Anna Hazare, who are not politicians, movie stars or cricketers have captured our attention and imagination. Their use of social and new media in combination with old style street activism, itself offers some interesting lessons in both leading change and leadership styles.

The challenge of course in formulating our leadership lessons from politicians and business leaders, whether in India or overseas, particularly from what is written about them is in separating the myth from reality. The natural question is that how much of this is business, culture or country specific and should we look to Indian business leaders to draw lessons for ourselves? Unfortunately a good deal of writing about business leaders in India has been panegyric limiting their usefulness as lessons in leadership. Fortunately much of what has been written about business leaders overseas, even when not scholarly, has been done so in mostly an objective manner and occasionally in an outright critical manner.

Warren Bennis’ “On Becoming a Leader” was inspired in his own words “by the gap between theory and practice, the difference between what one thinks and teaches and what one does.” By covering 28 specific individuals – men and women, all American, across a variety of professions, helps identify the critical ingredients for leadership success. More importantly he outlines a way to grow those qualities in us and in the people we will lead. As he states up front in his introduction, in his first book “Leaders” he covered the “Whats” and in this book, he covers the “Hows.” In the mold of Tom Peters and Peter Drucker, Warren Bennis has carved himself a seminal role in business through his research on Leadership. This book of his, rooted as it is in the real world of practicing leaders can help each of us become the leader we are fully capable of being.

This article originally appeared in the Book Beginnings column in Mint.

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Are you a failure if your startup fails?

Circuit City going out of business
Image by F33 via Flickr

“Son, businesses can succeed or fail. Because your business fails doesn’t mean you have failed!”

My father said this to me, one evening as the two of us sat down to discuss how the startup I headed was doing.

For a little over four years I had been running my startup. Months after we got started, the dot-com bubble peaked and burst. We had also chosen a technology, that everyone felt would not take off despite the initial hype. Our two nearest competitors where both American companies – one, also a startup, that had raised about 100 times more money than we had and the other a listed company with well over a 1000 customers. We’d over committed to the first three customers we’d acquired – miraculously in three different continents – and ultimately failed to deliver outright or were so late as to be not useful for the customers.

We had borrowed money from the bank (another of my father’s favorite piece of advice – debt is a good thing) and from family including my father. Just the previous year, we had to cut back on a rather ambitious – and poorly thought out – plan to design chips and keep our focus on software. We also had to let go nearly fifteen people, whom we’d hired in a burst, without much attention to culture fit, while persuading the people who remained to take 10-20% pay cuts with no commitments on when these cuts would be reversed.

This was also a time when I was commuting – spending two weeks every other six weeks in Bangalore, whilst my family lived in California. So between hotel rooms and my sister’s house, I spent many a night tossing and turning, worrying how we were going to make payroll that month and not sure if we’d ever turn the corner.

To add to the pressure, the senior staff, who’d been putting in 10-12 hours a day were buying first cars or homes incurring debt, getting married and now had spouses who now wondered what they really did. Once when we had to send a key engineer to a customer site overseas, we packed his new bride with him – so that they are not separated within weeks of their wedding! We’d had actually celebrated with a cake, when the company made its first million in revenue but ten minutes later had to dash off to dampen new fires.

This story did have a good ending. Despite ourselves we turned a small profit in year five and a real one in year six. We sharpened our business focus and were gaining traction.  Newer challenges emerged as pricing pressures drove deal sizes down, competitors were gobbled up by customers in some instances and the market adoption was slower than we anticipated, and the payroll bill continued to grow each year. Whilst my partners and our immensely committed employees along with some luck, brought us to a successful and profitable M&A conclusion, it was my father’s words that kept me going.

“Son, the failure of your company doesn’t mean you have failed.”

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Entrepreneurship in India – Rules for Spectators – Part 5

Koothu - Chennai Sangamam

Image by Ravages via Flickr

Entrepreneurship 2.0

What should all of us who care about entrepreneurship and helping it thrive in the Indian milieu do? There are three simple steps I believe we can take.

  • Story telling Collect and disseminate stories of entrepreneurial success at every forum and opportunity. Blog about it, write it up in a newspaper, share it at meetings. Just as the story of Dhirubhai or Karsenbhai inspires, stories such as Girish’s or Balan’s can ignite others to follow them. We need more stories of success, small and big, to make entrepreneurial success a realizable dream for more Indians. Every time we read a story of someone who’s made it big, we better find and tell stories of five others who have made it small. Demand that our newspapers and magazines celebrate the little guy as much as they do the big guy.
  • Encourage During and just after the Kargil war, there was a spurt of public appreciation for soldiers and the men (and women) in uniform. Even today when I travel in the USA, I see strangers walk up to soldiers in uniform, in airports or shopping malls, and thank them for doing their job. When was the last time we did that with any entrepreneur or business owner? The gentleman who runs the tyre shop with its six employees may well be tomorrow’s Kishore Biyani with the right breaks. Ask how their business is doing, listen to their story and appreciate them openly and explicitly.
  • Educate Each of us has skills that if we share with entrepreneurs will help them get ahead. It could be teaching them how to raise capital, hire senior staff, make better presentations, manage their cash flow or land major accounts. This education is best accomplished by doing. “Show – not tell!” as good writing coaches say. We can do this even by creating forums for bringing entrepreneurs together. Just by sharing each others experiences they can learn from one another and most importantly gain the insight that they are not alone.

Now as three of us embark on our latest entrepreneurial journey at Zebu, we are once again those little guys starting out (though not in a garage but in a small house). I know we could certainly use all the encouragement, education and story telling to stay the course.

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