CSI Entrepreneurship event started with Anand Deshpande talking about “Why entrepreneurship?” He stressed people to think about why you want to go for entrepreneurial career. Answers were like earning money, being own boss, making a difference, satisfaction, etc. Anand mentioned that if you are entrepreneur for earning money, you have made a wrong decision. There is tremendous risk and asked those people to go to investment advisor rather than becoming entrepreneurs. He shared his story of how Persistent began as outsourced product based company and how they succeeded. Contacts in US provided him a good start for entrepreneurial career. He summed up his discussion saying ‘you need to be at right place at right time’ but the thing is you only know in future that you were at right place at right time J
Later there was also a talk from another entrepreneur (Harsh Barve) from Sungard India who shared his story about entrepreneurship and his success by selling to Sungard. He also started with the work which he got from contact he developed while in US. The trend generally is once you satisfy a customer; with reference you earn more work. He also stressed the importance of having functional expertise in the team which is crucial in IT services for areas like financial services automation. Selling the company later to Sungard, was seen as valuable opportunity – as it made them work with leaders in field and expand their expertise by working with various teams inside a big company. He mentioned that initially after acquisition there was not much growth but as various team got credibility about the Indian operation they experienced tremendous growth over 100% every year in employee headcount.
There was another talk from Manik Arora (Founder and Managing Director of IDG Venture India). First impression from him was that it’s good to see venture capitals setting up operations in India and people with experience in VC industry moving back to India, to repeat success stories of US. Manik started stressing how important it is to approach VC with reference. For VCs, as they invest huge sum of money, comfort with entrepreneur is must and hence entrepreneur should spend lot of time with him even before the company look out for funding. He later discuss in brief in general what all entrepreneur should prepare for VC – most specifically all elements of business plan, details of which can be found out at http://idgvcindia.com. For early stage companies as there is hardly any financial and significant information about market numbers and / or customer lists, he mentioned that it is important for entrepreneur to show the speed with which they are growing in the market place (show some traction in market place). He also mentioned in between his talk that experience is important for entrepreneur and said that working in large company will help entrepreneur to understand the business, processes and its weakness which startup can exploit. In terms of valuation he mentioned that all depends on how much is the investment and how much the VC should own to get 5-10x return on exit. E.g $2M investment -> 10x expectation -> $20M on exit. With market figures if the company looks good to be acquired at $100M in 5 years, VC will need 20% of company. So the valuation is $10M (post-money, pre-money is $8M).
Finally, there was a panel discussion moderated by Madhukar Bhatia of nFactorial. Manik Arora (IDG Ventures), Yoshima Somvanshi (National Entrepreneurship Network), Sandeep Kumar (Product Dossier), Vishwas Mahajan (Compulink), Ajay Pathak (Jopasana now part of Core Objects) and Rajeevlochan Phadke (Image Point) were present in panel discussing entrepreneurship and sharing their experiences. Madhukar started the discussion by asking what environment is needed for successful startup. Manik mentioned risk taking ability and feeder companies (which can generate talent / skills required for product based companies) as the key thing. Besides he also discussed the key problem – US market being far away and domestic market still in early stage. Ajay adds to Manik’s point of risk taking ability that for startup to succeed you also need risk taking customers. Interestingly in the discussion it was found out that the entrepreneurs in the panel were customers of each other! (Vishwas was customer of Rajeevlochan, Ajay was customer of Vishwas) So experience says product based company can have customers even in India and this is growing. However, Sandeep experience seems to be like customers don’t trust Indian companies and says the problem is not customers but lack of success stories.
Ajay shared his story of Jopasana which started as product based company but due to a mistake (selecting OS2 instead of Microsoft) which was very critical it had no option but to convert to service based company (They could have rebuilt products on Microsoft’s OS but it was too late and fund was not enough to support this decision). Recently they merged with Core Objects which has been a good strategic decision for them and they have been successful to help other product based companies overall in the process with the experience they have gained over long time. Interestingly, Vishwas’s company was opposite – they started as service based company just before the dot com bust and later they found no service revenue opportunity which made them think for building products! Vishwas mentioned that founders should complement each other’s skill-set and having one in technical and other in business domain really helps and increases probability of success. Vishwas also shared his story on limited funding which he took. The key learning was never approach VC without customers (since anyway they will ask for that before they fund), so keep focusing on getting customers rather than fund. This will also help you build products with real requirements.
Manik was asked about trends for product based companies in India or more specifically if VC’s are looking to invest in certain sectors. He mentioned that there is no such trend but the key is people – management team is something which is very important consideration by VC. Yoshima was asked about what is NEN doing and how are students participating in helping craft startup success stories. NEN is a not-for-profit organization established by some of the leading colleges in India (Wadhwani foundations – ISB, partnering with others like IIMA, IIT’s, Bits-Pilani) to create awareness and expertise in students graduating in various colleges so that they bring much higher value additions in startups and therby build a good pool of students for startup ecosystems. NEN is focusing in general to help create good ecosystems for startups in India. Recently, they had a startup jobs program which was basically a placement day just for startups. 25 jobs were said to be offered out of which 18 were accepted. The key to get this number growing was that students do internship with startups which gives them an idea about the work in startup – how interesting and challenging opportunities they might undertake.
Lastly there was another important discussion on how talent is retained in startup? Experience says that people don’t work for money in startup, if the work is interesting and responsibility is shouldered to young guns, there is much satisfaction and more importantly they should also feel a part of success story. Manik also shared Premji’s philosophy in terms of employee retention – whenever a person is 60%-70% ready for next level of responsibility, push him into that – he will be too busy with his work (14-15 hours a day) and hardly worry about leaving! Ajay who has been very successful in retaining talent for Jopasana for long time, says don’t worry much just concentrate on doing your best – he still is unaware why people stayed with him for long time!
Also check the DeskTalk – newsletter from CSI Pune released during the event which has more interesting stories to share from experts.