I see lot of people starting companies who are very bright and call themselves Entrepreneurs but unfortunately most of them like me are just businessman, they are doing it for the money (sad but true). I bet, 98% people who are starting the startups are doing it for money. If you tell them that you have a great product and service, why not make it free and non profit, no will do it as everyone wants to make millions of dollars.

There is absolutely nothing wrong in it, as I am also just like the other 98%, I comes from typical middle class Indian family, in life have struggled a lot (and thanks to my stupidity, I have made things look more tough they what they were, I will talk about it some other time) and have fought for limited resources (engineering seats/CGPA/Campus placement/railway tickets) at numerous moments just like millions of others in the country. Because of this struggle at every moment, there is a strong desire in Indian youth who comes from middle class families to do something bigger and because Indians give so much value to money (money == success), everyone wants to make lot of money as people feels this is what success is all about and to large extent it is true as lot of money means you are getting everything easily for which you had to struggle in life which result in happiness.

Now I can write a lot on happiness, money, dreams, ambition but this post is not about them. This post is about, how the “founders” are not able to differentiate between being a businessman and an Entrepreneur. I strongly feels that there has to be a balance between the founders being both businessman and Entrepreneur, as if you are just a businessman then you become a “dukaan wala”, you are not building something big and awesome and are not looking to make change in the world and making it a better living place, you are putting yourself at the center of eveything and will avoid any kind of risk, which may make you money but that is it. And if you are an entrepreneur only, who is least bothered about the market, clients and profit, you may have to shut down your company after 18 months when you run out of money.

I hope this post don’t sound like random incoherent rambling (which I often do), the gist of the post is, keep a balance between being a businessman and an Entrepreneur

Most of the guys who are starting companies are software engineers so writing code, building sites and developing software is not a big deal, it is exciting for the founders but once they finish building the product, they hit a block asking themselves, now what! Most of them don’t understand marketing and have no money for it so they can’t hire others to do marketing and to do other part of the company (other means anything and everything other then building and maintaining code), so why not all these startups join hands and work together ?

For example, lets take groupon idea, it got a huge success in USA and as expected, now India has half dozen similar sites offering exact same service, none of them has got great traction because the idea hasn’t picked up, now assuming some 20 people are working on 6 of these companies, why don’t they all join hands and form a single company ? people may say that having 20 cofounders will never work but then people also said that the earth is flat till someone showed that it is not.

Also 100 percent of Nothing is Nothing so having total ownership of a company whose valuation is zero is not something which any founder want, instead if you have a company with 20 people and a idea which is “clicking”, you will get instant 10x valuation of your company (which now has 20 employees, none taking any salary). IMO 5% of a million dollar company is always better than 100% of zero dollar company

Joining hands will also cut down the cost of expenses and increase the life of the company in case if it don’t get any revenue, infact such companies probably don’t even need any outside funding as they can make profit on their own. Now the thing is, who will roll the ball first ?

In the last 4 months, I must have met over 3 dozen startups in Mumbai, Bangalore and Delhi, most of them have got initial round of funding (very small) and are looking for next round of funding, though I feels they are exceptions and the chances of you getting any bootstrap funding is almost zero unless

1. You already have good contacts and network with VC
2. You are in your 30s and have say 10+ years of experience, specially at management level in some really big corporation
3. You are a team (2 is good, 3 is even good) from IIT/IIM

so if you (like me) don’t fell in these categories, you are better off putting your own money in your venture rather than looking for external funding since you won’t get any. I have always felt, in India, you can easily bootstrap for 5 Lakh, may be 10 lakh at max if you do not hire anyone and do all your work (like development, Maintenance and marketing) and it is not that difficult to get such amount now days, infact if you are 3 partners, you all 3 can put 2 lakh each and do all the work and that 6 lakh can go a really long way!

No investor is going to give you any money of his, if you yourself do not want to put any money of yours on your own idea.

Another problem of getting initial seedfund of 20 lakh and less is that, for investors it is not worth their time to deal in such small amount and you may be wasting your time too in trying to contact with them, you may be better of putting that time in building the product and talking to clients and getting their feedback, if you good traction and visibility, investors will anyway chase you.

I met many angel investors during my visit to Mumbai as well as have interacted with them at various other occasions including my failed attempt in 2008 to raise some fund for a project of mine, so I do have experience of 3-4 years of understanding angel investors fairly well, so here is a post about how Indian investors think and work. I hope it helps few of you guys who are looking to raise some funds.

1. Most of them look to spend 50 lakh (unless they are very sure that the idea is great in which case they will get money from some network) only so if you are looking to raise say 2 crore, you need to find multiple angel investors.

2. The chances of putting money on just idea are very less, like 1 in 1000. Everyone want to see some working revenue model and first client. For US angel investors, proof of concept normally do it but this is not the case with Indian angel investors.

3. They are there to make money, none of them is looking to change the world so if your model has no earning potential, you better find something before approaching them.

4. They love IIT/IIM people like anything, try to find someone and get in your team as a mentor if that is possible.

5. Most of them will never say direct No and will keep you in loop, something you should be careful of, as you don’t want to waste your time chasing angel investors, if your product is good, they themselves will come to you,

6. Don’t expect them to put money unless you yourselves haven’t put any. Every angel expect you to put 20 lakh atleast from your own side first to make them believe that you are serious. Ofcourse for web startups you don’t need this much money specially if you yourself can do all the work but still, they do want you to take the first steps and risk before they put their money.

7. Angel Investors don’t like people who are doing jobs and running the startups in parallel (why will they?), so if you are looking to approach angel investors, you better have a really good reason of why you are keeping your job and when you are planning to quit.

8. I often got this feeling that most of the Indian angel investors like to play very safe, I mean may be because of lack of proper funding options for startups, the “power” balance is highly shifted towards them, hopefully in next few years, this shift gets more balanced with more money getting poured from NRIs.

9. If you have a team of 2-3 people, the chances of you getting the funding is higher then a single person, I personally feels 3 is a crowd and 2 are enough.

10. If you think you can not survive without the angel funding, offer them good equity, say 30% for reasonable price, say 50 lakh. Giving 30% may look big but this will help you to get moving. If you don’t want to give this much equity, raise money on your own first or find more partners.

11. Be realistic and think from the investors point of view, you better don’t attach any immolation, they are a real turnoff and shows your immaturity.

12. Did I mentioned that they are only there to make money ?

I have to go a long way but I have my share of success and failures and learnings and one thing which I leanred the hard way is, you need to kill it before it gets too late.

It happens with way too many of us when we are putting all we have into something which we believe in that we blindly feels it is the next big thing even though it is not, we don’t care about what people says and pumps more money and time and try to create non existing market and then we realize that OK, it is indeed too late and your idea, product or service is not going anywhere.

I am obviously way to new in this field to suggest people when to quit and when not to, though if asked, I will always suggest people to hang in there as much as you can since the more you hang in there, the more chances you have to succeed, ofcourse this do not apply if your expenses are increasing way too rapidly than your growth, something which happens with lot of non web startups.

Personally I feels, you should complete the cycle and only then call it quit, so launch the product, see how market reacts, if you feels it hasn’t done well, make some changes, then see how market reacts, see everything from finances point of view (you shouldn’t even start if things don’t look good from finance point of view) and only then kill the product.

By the way, you may want to read this post how to evaluate new product ideas too.

Iqbal Gandham – Idea to A Business in 30 minutes from Iqbal Gandham on Vimeo.

Just read a news headline on digg that Apple is looking to launch its “kindle” killer and people were already rooting for it even though most of the people are very much satisfied with that $400 kindles (it delivers what it promise so no reason for people to complain). This “rooting for” is something which always made me wonders how strong can be this coolness factor.

For example, Google and Apple are cool, WalMart, Verizon and AT&T are not. It is not that difficult to tell why some companies are cool and why some are not. In case of apple, they make trendy, exclusive and great (though overpriced) products, people don’t mind paying more money as it make them look hip and cool. On the other hand, companies offering day to day products which are so mainstream that the people don’t even care about the company like walmart and verizon can never have the cool image, and I don’t think their marketing team is even trying to make them look cool (which is surprising though I am sure there must be reason behind it)

Now I strongly feels, if you are a startup or small company looking to offer B2C service or product, you want to be cool, because there is nothing better then having a fanbase spreading information about your product and service for free and this loyal fanbase will stick with you in good and bad times as long as the feeling of being special is reciprocated. Offering the product/service for free and helping people without expecting anything in return are two easy ways to be cool.

PS – pic unrelated but still you can check the story behind professor badass here

Let me quote the most important part of the article for you which is at the end

Turakhia said the company’s phenomenal growth has been fueled by bringing the right people onboard. “Since our inception in 1998, our policy is to hire the best, provide them with the resources and authority, and then step out of the way,” Turakhia said. “Without the best people, you can’t build the best company. We make mistakes, just like anyone else. But we also make more decisions, better decisions and faster decisions than most other companies.”

“Authority is decentralized. Hierarchy is purely structural in nature. Every employee has the authority to make independent decisions with respect to their work. My job is merely to make available and accessible the right training and knowledge, the best tools and resources, and the information that an individual needs to make better decisions. I try to spend a significant portion of my personal time towards Human Resources. When the majority of the people within the company pro-actively make decisions by themselves, the growth rate increases significantly,” Turakhia said.

Edit – Another good coverage of him by rediff