India is yet to witness a breakthrough ecommerce success story particularly in online retail. There are number of barriers, most of them out of your control, which makes this space difficult to conquer. Travel and Matrimony ventures are doing relatively good and we will see why the case is so.
A successful business requires a lot of auxiliary services which supports the main business. Internet based businesses are no different. In effect, the companies providing these services necessarily become your business partners and that too, interestingly, in revenues and not profits. If you are a garage based startup, sorting these things out will be bigger challenge than getting visitors to your site. You will have to invest significant amount of time and energy in just setting up basic things.
India still hasn’t developed a matured ecosystem which will help small, low on fund startups to grow. At some point or the other, you will have to get your hand dirty and make efforts to put all these auxiliary services in place. Not only you have to look for services with minimum service level but also make sure that it doesn’t put a hole in your pocket.
An eBusiness is a normal business with internet as a medium. This doesn’t change basics of the business but instead you have one more responsibility to make it work on the internet.
Following are some of the infrastructural barriers responsible for slow growth of eCommerce in India. Some of these even present new business opportunities.
■Payment Collection: You could end up giving a significant share of your revenue here (~4% or more) even when you get paid by netbanking. With a business of thin margin, this effectively means you are parting away with almost half of your profits. Fraudulent charges, chargebacks etc. all become merchant’s responsibility and hence to be accounted for in the business model.
To add to it, you still don’t get that world class service which gives a seamless experience for users. They might be greeted by a poorly designed landing page of your gateway which will ask a million questions even if user wants to pay by netbanking. This might lead to low conversion rates.
■Logistics: You have to deliver the product, safe and secure, in the hands of the right guy in right time frame. Reaching this Holy Grail with not spending too much is a dream for Indian ecommerce initiatives. Regular post doesn’t offer an acceptable service level, couriers have high charges and limited reach. Initially, you might have to take insurance for high value shipped articles increasing the cost. Low value articles will have significant shipping cost which will make them costly.
■Vendor Management: However advanced your system may be, you will have to come down and deal in an inefficient system for inventory management. This will slow you down drastically. Most of them won’t carry any digital data for their products. No nice looking photographs, no digital data sheet, no mechanism to check for daily prices, availability to keep your site updated.
■Taxation: Octroi, entry tax, VAT and lots of state specific forms which accompany them. This can be confusing at times with lots of exceptions and special rules.
Travel industry doesn’t have a problem of logistics. Their vendors have very advanced reservations system in place already which will tell you about real-time pricing and availability. They have long been accepting card payments and it’s now part of their business model. All the taxes levied to them are usually easy to calculate as it comes from their vendor itself. This domain is already conquered.
The challenge left is in the area of selling tangible goods. What’s your take on these issues?
interesting and challenging enough i guess....
Thursday, December 23, 2010
Saturday, December 18, 2010
Reasons why you should NOT start a biz...!!
We come across various resources on the internet on how to start a business, and making it more complicated everyday making us wonder if there are so many points to remember while starting up a biz?? I just thought of some points which are relevant in making a decision why NOT to start a biz....
1. Don’t Start a Business for the sake of MONEY
Top on the list of reasons why people go into business is the strong desire to amass wealth. I have never known of a more ineffective way to think about business than this. As unpopular as it might sound, most business failures stem from this singular fact alone. Why? Because the moment making money becomes your primary focus as an entrepreneur, delivering value which is the foundation of effective business practice becomes secondary. And when this happens, no matter how great your business is, it automatically goes on a downward spin. Nothing kills a business faster than putting money first before adding value. So when next you’re thinking about starting up a business, I suggest you lose every possible thought about making money and focus entirely on delivering consistently superior value. Trust me, I’m talking from experience (of other people), starting your own business for the purpose of making money is a sure fire way of being highly indebted and having cardiac arrest!
2. Don’t Start a Business because you LOST your job
Closely related to the issue of money is going into business because you lost your job. As you’ve probably realized, this is how many people end up as entrepreneurs. At first glance, there might not be anything wrong with this approach of starting up a business, but taking a closer look will reveal a vital truth; people who lose their jobs are often driven by fear and to start a business because you are afraid is absolutely disastrous. The implication is often enormous; top on the list is that you will never exercise the due diligence starting a new business entails. Why? Because the fear of living without a regular income since you no longer have a job will keep haunting you and eventually start making you place unrealistic financial expectations on your new business venture. Second on the list is that you are emotionally unstable the first few months of losing a job, especially when you didn’t see it coming.
3. Don’t Start a Business because you HAVE money
I know you’re probably startled about this one. You certainly didn’t see it coming. Well, it’s as wrong as starting a business for the sake of making money. How? Here’s the thing most people with money don’t realize, it doesn’t take money alone to make a business work. Starting and running a business will cost you more than all the money you think you have. There are just too many things a business will demand from you that money can’t even buy, for example; how much does it cost to buy the passion needed to build a SIGNIFICANT (unique and useful) business? Have you ever seen passion being offered for sale? In fact, no university or institute of learning can even teach you passion (not even Harvard or Stanford). Here’s the truth, having money is good, but it’s not sufficient enough to make you want to start a business. Starting a business requires gut, passion, ingenuity, creativity, resilience and so many other personal character traits that all the money in the world is insufficient to buy!
4. Don’t Start a Business because you want TIME Freedom
The thought of not having to wake up early and rush off to work can be very enticing to would be entrepreneurs. But take it from me, I’ve been in the game now for 4 years; the fact that you didn’t wake up early and rushed off to work doesn’t mean you are not at work. Being an entrepreneur means working all of the time even in your sleep. That your fantasy of time freedom will naturally go sore once you choose to become your own boss. How do I mean? You see, it’s not that you wouldn’t have more time to yourself when you’re an entrepreneur, certainly you would. But the irony of it all is this; that time freedom is for you to do some creative work and not for you to be idle and indulge yourself in some unproductive activity. You left your job to have enough time to do what you really care about in life, that’s all the definition of time freedom you’ll ever get – having enough time to make a SIGNIFICANT contribution with your life to the world. True entrepreneurs hardly stay idle indulging in pleasurable activities just because they have time freedom. They are always in the creative process, picking up clues here and there of how they can make the world a better place by utilizing their time, money and life for something worthwhile.
5. Don’t Start a Business because OTHERS are doing it
Anything that is popular has a way of being highly contagious. People just literally jump at it without any logical explanation. Believe it or not, this is how so many people ended up in the world of business. Since everyone they know is quitting their 9-to-5 jobs to go start their own thing, why shouldn’t they do the same? The down side of going with the bandwagon is this; you’ll lack the staying power critical to survival in the world of business. At first, the thought of being your own boss can be very enticing, but sooner or later you’ll realize it’s not a bed of roses. And when this reality sets in, you’re the only one who would be left alone to figure out a way of making it through the stormy days. So start a business because it’s what your soul desires and not what the society or your peers desires for you. Starting your own business is not about boosting your personal ego or winning a popularity contest, it’s a personal decision born out of an internal conviction!
6. Don’t Start a Business because you HATE working for others
Now here comes the tricky one; starting a business because you hate working for others. After wanting to make money, this is another popular reason people give for going into business. Listen, as popular as it may seem, here’s the truth; 99% of popular things are either totally wrong or mere misconceptions. That you hate working for others is no guarantee that you will succeed or enjoy working for yourself. In fact, there’s more work to do working for yourself than you ever thought you did working for others. So if you hate working for others, you might just as well hate working for yourself. What it turns out to be sincerely is this; you simply don’t like work in general and this is why starting your own business is the last thing you should ever think of doing. Why? Because business is the domain of unlimited work; there are no working hours like your regular 9-to-5 job. Welcome to the 24/7/365 days a year working schedule!
7. Don’t Start a Business just LIKE everybody else (Differentiate or Die)
In my field of business development, I have seen so many people go into business just because they saw somebody else succeeding in it. This is a higher form of going into business because others are doing (point #5 above). You observe a business and simply go make a clone of such business. So what do we get? The same kind of business but with different brand names. I don’t get it; “Why would any right thinking person choose to be a duplicate of another when it’s absolutely possible to excel being an original?” As a matter of fact, you have higher chances of succeeding going into business as an innovator than being a duplicator.
The business terrain is already overcrowded filled with countless number of companies doing almost the same thing you have in mind to do. Unlike in the past before the advent of the internet where you had only local or national competitors, such is no longer the case in this age of globalization. Now your competitors are all over the world and just one click away from your local or national target market. So why would you want to build a business just like your neighbor? Here’s the deal; if your business doesn’t stand for something SIGNIFICANT (unique and useful) there’s no need repeating what others have already done and giving it another name. Meaning, if there’s nothing positively unusual about your business, don’t bother going into business to offer the same old milk but now in a new brand skin or container. Doing this is the fastest way of route to extinction. In other words, differentiate or die!
8. Don’t Start a Business without SUFFICIENT planning
Business is a highly complex activity and therefore requires adequate planning. It’s been statistically proven that inadequate planning is top among the reasons why most businesses fail. I’m sure you already know that by now (that’s why it’s the second to the last point). Why then did I include it in the list? Because most times, the problem is not about what we don’t know but more of what we do know but never put to use or practice. There’s a phrase that best captures the essence of planning and it goes like this; “He who fails to plan, plans to fail”. And a key element of planning is having a long term perspective of things or as it is popularly called; seeing the big picture. Which intentionally, happens to be the subject matter of the next point to which we now turn.
9. Don’t Start a Business that cannot OUTLIVE you
One of the underlying principles of the Accounting profession is called; “going concern” which means that a business must be in perpetuity. That is, a business is meant to exist as far as there’s still a need to be met. It’s just basic human nature; I mean who wants to raise a child only to watch the child die before their eyes? In the same regard, you should never start a business that has a short lifespan. Starting a business from a short term or temporary viewpoint, as far as I’m concerned is the definition of selfishness. Why build something temporary when you have the potential to create something eternal? The joy of any creator is to see his/her creation rise above their widest dream and outlive the very existence of the creator. So here’s the ultimate question for you; “does your business have the capacity to outlive you?” OR “Would your business still be in existence long after you’ve gone?” Never start or go into a new business without asking and providing answer to either of these questions.
What then is the RIGHT way to start a business?
It’s in the bid to help you answer these two questions above that I now offer the only right way to start a business.
Start a business because you have something SIGNIFICANT (unique & useful) to contribute to the benefit of the human race!
Why?
Because a business is a tool that entrepreneurs create in order to make a SIGNIFICANT (unique & useful) contribution to the world by addressing a particular problem plaguing the human race.
1. Don’t Start a Business for the sake of MONEY
Top on the list of reasons why people go into business is the strong desire to amass wealth. I have never known of a more ineffective way to think about business than this. As unpopular as it might sound, most business failures stem from this singular fact alone. Why? Because the moment making money becomes your primary focus as an entrepreneur, delivering value which is the foundation of effective business practice becomes secondary. And when this happens, no matter how great your business is, it automatically goes on a downward spin. Nothing kills a business faster than putting money first before adding value. So when next you’re thinking about starting up a business, I suggest you lose every possible thought about making money and focus entirely on delivering consistently superior value. Trust me, I’m talking from experience (of other people), starting your own business for the purpose of making money is a sure fire way of being highly indebted and having cardiac arrest!
2. Don’t Start a Business because you LOST your job
Closely related to the issue of money is going into business because you lost your job. As you’ve probably realized, this is how many people end up as entrepreneurs. At first glance, there might not be anything wrong with this approach of starting up a business, but taking a closer look will reveal a vital truth; people who lose their jobs are often driven by fear and to start a business because you are afraid is absolutely disastrous. The implication is often enormous; top on the list is that you will never exercise the due diligence starting a new business entails. Why? Because the fear of living without a regular income since you no longer have a job will keep haunting you and eventually start making you place unrealistic financial expectations on your new business venture. Second on the list is that you are emotionally unstable the first few months of losing a job, especially when you didn’t see it coming.
3. Don’t Start a Business because you HAVE money
I know you’re probably startled about this one. You certainly didn’t see it coming. Well, it’s as wrong as starting a business for the sake of making money. How? Here’s the thing most people with money don’t realize, it doesn’t take money alone to make a business work. Starting and running a business will cost you more than all the money you think you have. There are just too many things a business will demand from you that money can’t even buy, for example; how much does it cost to buy the passion needed to build a SIGNIFICANT (unique and useful) business? Have you ever seen passion being offered for sale? In fact, no university or institute of learning can even teach you passion (not even Harvard or Stanford). Here’s the truth, having money is good, but it’s not sufficient enough to make you want to start a business. Starting a business requires gut, passion, ingenuity, creativity, resilience and so many other personal character traits that all the money in the world is insufficient to buy!
4. Don’t Start a Business because you want TIME Freedom
The thought of not having to wake up early and rush off to work can be very enticing to would be entrepreneurs. But take it from me, I’ve been in the game now for 4 years; the fact that you didn’t wake up early and rushed off to work doesn’t mean you are not at work. Being an entrepreneur means working all of the time even in your sleep. That your fantasy of time freedom will naturally go sore once you choose to become your own boss. How do I mean? You see, it’s not that you wouldn’t have more time to yourself when you’re an entrepreneur, certainly you would. But the irony of it all is this; that time freedom is for you to do some creative work and not for you to be idle and indulge yourself in some unproductive activity. You left your job to have enough time to do what you really care about in life, that’s all the definition of time freedom you’ll ever get – having enough time to make a SIGNIFICANT contribution with your life to the world. True entrepreneurs hardly stay idle indulging in pleasurable activities just because they have time freedom. They are always in the creative process, picking up clues here and there of how they can make the world a better place by utilizing their time, money and life for something worthwhile.
5. Don’t Start a Business because OTHERS are doing it
Anything that is popular has a way of being highly contagious. People just literally jump at it without any logical explanation. Believe it or not, this is how so many people ended up in the world of business. Since everyone they know is quitting their 9-to-5 jobs to go start their own thing, why shouldn’t they do the same? The down side of going with the bandwagon is this; you’ll lack the staying power critical to survival in the world of business. At first, the thought of being your own boss can be very enticing, but sooner or later you’ll realize it’s not a bed of roses. And when this reality sets in, you’re the only one who would be left alone to figure out a way of making it through the stormy days. So start a business because it’s what your soul desires and not what the society or your peers desires for you. Starting your own business is not about boosting your personal ego or winning a popularity contest, it’s a personal decision born out of an internal conviction!
6. Don’t Start a Business because you HATE working for others
Now here comes the tricky one; starting a business because you hate working for others. After wanting to make money, this is another popular reason people give for going into business. Listen, as popular as it may seem, here’s the truth; 99% of popular things are either totally wrong or mere misconceptions. That you hate working for others is no guarantee that you will succeed or enjoy working for yourself. In fact, there’s more work to do working for yourself than you ever thought you did working for others. So if you hate working for others, you might just as well hate working for yourself. What it turns out to be sincerely is this; you simply don’t like work in general and this is why starting your own business is the last thing you should ever think of doing. Why? Because business is the domain of unlimited work; there are no working hours like your regular 9-to-5 job. Welcome to the 24/7/365 days a year working schedule!
7. Don’t Start a Business just LIKE everybody else (Differentiate or Die)
In my field of business development, I have seen so many people go into business just because they saw somebody else succeeding in it. This is a higher form of going into business because others are doing (point #5 above). You observe a business and simply go make a clone of such business. So what do we get? The same kind of business but with different brand names. I don’t get it; “Why would any right thinking person choose to be a duplicate of another when it’s absolutely possible to excel being an original?” As a matter of fact, you have higher chances of succeeding going into business as an innovator than being a duplicator.
The business terrain is already overcrowded filled with countless number of companies doing almost the same thing you have in mind to do. Unlike in the past before the advent of the internet where you had only local or national competitors, such is no longer the case in this age of globalization. Now your competitors are all over the world and just one click away from your local or national target market. So why would you want to build a business just like your neighbor? Here’s the deal; if your business doesn’t stand for something SIGNIFICANT (unique and useful) there’s no need repeating what others have already done and giving it another name. Meaning, if there’s nothing positively unusual about your business, don’t bother going into business to offer the same old milk but now in a new brand skin or container. Doing this is the fastest way of route to extinction. In other words, differentiate or die!
8. Don’t Start a Business without SUFFICIENT planning
Business is a highly complex activity and therefore requires adequate planning. It’s been statistically proven that inadequate planning is top among the reasons why most businesses fail. I’m sure you already know that by now (that’s why it’s the second to the last point). Why then did I include it in the list? Because most times, the problem is not about what we don’t know but more of what we do know but never put to use or practice. There’s a phrase that best captures the essence of planning and it goes like this; “He who fails to plan, plans to fail”. And a key element of planning is having a long term perspective of things or as it is popularly called; seeing the big picture. Which intentionally, happens to be the subject matter of the next point to which we now turn.
9. Don’t Start a Business that cannot OUTLIVE you
One of the underlying principles of the Accounting profession is called; “going concern” which means that a business must be in perpetuity. That is, a business is meant to exist as far as there’s still a need to be met. It’s just basic human nature; I mean who wants to raise a child only to watch the child die before their eyes? In the same regard, you should never start a business that has a short lifespan. Starting a business from a short term or temporary viewpoint, as far as I’m concerned is the definition of selfishness. Why build something temporary when you have the potential to create something eternal? The joy of any creator is to see his/her creation rise above their widest dream and outlive the very existence of the creator. So here’s the ultimate question for you; “does your business have the capacity to outlive you?” OR “Would your business still be in existence long after you’ve gone?” Never start or go into a new business without asking and providing answer to either of these questions.
What then is the RIGHT way to start a business?
It’s in the bid to help you answer these two questions above that I now offer the only right way to start a business.
Start a business because you have something SIGNIFICANT (unique & useful) to contribute to the benefit of the human race!
Why?
Because a business is a tool that entrepreneurs create in order to make a SIGNIFICANT (unique & useful) contribution to the world by addressing a particular problem plaguing the human race.
Friday, December 10, 2010
Wednesday, December 8, 2010
Tuesday, December 7, 2010
Sunday, December 5, 2010
Thursday, December 2, 2010
The elevator pitch is one of the most important elements in starting your business successfully. Picture this: you are searching for funding for your new business, taking an elevator from a big meeting when in walks Donald Trump. What do you do? Do you freeze up when he asks you what you are doing here or do you nail him with a perfect pitch, snag his business card and score a meeting?
Here is a guide to the several core elements of the elevator pitch. This is not your “commercial” and is not a sales pitch. That can be crafted from this, but this serves as a professional pitch with the purpose of raising investment for your business. This is a pitch for your company, not what you are selling. Tell them why your business will be successful.
This pitch needs to be short and to the point, because by the time the elevator stops, you’ll need to have completed your pitch!
Step 1: The Hook
First you’ll need to grab your audience’s attention. Why should they care? If they are an investor they’ve heard dozens of pitches this week. How will yours stand out from the crowd and get a call back? You’ll need to appeal your audience by speaking directly to their problem. Try asking them a question or strike them with humor to get them thinking or warrant a response.
Example: Do you remember how much time and money you spent struggling to start your first business?
Step 2: The Problem
Every business needs to solve a problem. The best businesses are born out of necessity, where the entrepreneur found a problem in their life or business and figured out a product or service that would fix this problem for others. Make this perfectly evident in your elevator pitch and score extra points if you phrase it in a way your audience can relate to.
Example: Young people who have business ideas often don’t know where to start and have no place to go for simple, straightforward advice.
Step 3: The Solution
Now that you’ve set yourself up, it’s time to solve that problem. What does your business do? You should present the name of your business in this step. How can your business help your market?
Step 4: The Market
Your audience wants to know who you are going to sell to and how large that market is. Basically an investor will want to see how big the opportunity is to make money. Don’t just throw a big number in there and say “the enterprise creation industry is a $50 billion industry and we plan on capturing 1% of it”–you will get accused of pulling this number out of the sky.
Step 5: Revenue Model
Next your audience will want to know how your business plans to capitalize off that market? In other words, how does your business work/make money? Is it an e-commerce site? A service? Retail? Explain.
Example: cnn.com will publish expert advice, interviews with the most successful young entrepreneurs and offer discounts on services to help small business owners. The site will generate revenue from advertising and referral fees we negotiate from our most trusted vendors.
Step 6: Competitive Advantage
Why will your company succeed and what will be your secret to success? Investors want to know what competition exists and how you plan to differentiate yourself. This is your time to explain why there is room in the market for your product/service.
Step 7: Management
So by now your audience should believe in your product, but why should they bet on you? Who’s behind the product and why will your team be successful? Investors want to know your track record and want to see passion for your business. It’s better to have an “A team” and a “B idea”, than a “B team” and an “A idea”. Prove your credibility!
Example: Our founding team includes two young entrepreneurs who know just hard it is to start a business for the first time. Matt Wilson and Jared O’Toole have been featured everywhere from Entrepreneur to The Wall Street Journal, have 4 years experience running the world’s #1 Collegiate Entrepreneurs’ Organization and consult for digital marketing clients across the country.
Step 8: Finances
Investors want to know when you will be profitable, how long it will take you to make money and how much money you can expect to make. Investors know that these are just estimates and that when you are in a startup you really can only go by your best guess, but don’t tell someone you are going to make $10 million in your first 6 months or you’ll be laughed at.
If you are already profitable tell them how much money you are making and how their investment will help you create more profits.
Example: Facebook has been profitable for X months and has made $xxx,xxx in advertising and revenue sharing profits. The company plans on creating revenues of $x,xxx,xxx by the end of 2011.
Step 9: What is your exit strategy?
Your investors want to know how they will cash out on their investment. Are you looking to sell the company? IPO? Merge with another company? What are your goals?
Step 10: The Ask
Be sure to tell your audience what their investment will be used for. This is your time to close the deal. If you want a business card, an investment or to set up a meeting you’ll need to prompt them and ask. Be as specific as possible with your ask especially if it is for money. Be direct when closing the deal.
Example: We are seeking investment of $xxx,xxx to hire a full time developer, sales team and upgrade our Manhattan office space.
Makes Sense??
Here is a guide to the several core elements of the elevator pitch. This is not your “commercial” and is not a sales pitch. That can be crafted from this, but this serves as a professional pitch with the purpose of raising investment for your business. This is a pitch for your company, not what you are selling. Tell them why your business will be successful.
This pitch needs to be short and to the point, because by the time the elevator stops, you’ll need to have completed your pitch!
Step 1: The Hook
First you’ll need to grab your audience’s attention. Why should they care? If they are an investor they’ve heard dozens of pitches this week. How will yours stand out from the crowd and get a call back? You’ll need to appeal your audience by speaking directly to their problem. Try asking them a question or strike them with humor to get them thinking or warrant a response.
Example: Do you remember how much time and money you spent struggling to start your first business?
Step 2: The Problem
Every business needs to solve a problem. The best businesses are born out of necessity, where the entrepreneur found a problem in their life or business and figured out a product or service that would fix this problem for others. Make this perfectly evident in your elevator pitch and score extra points if you phrase it in a way your audience can relate to.
Example: Young people who have business ideas often don’t know where to start and have no place to go for simple, straightforward advice.
Step 3: The Solution
Now that you’ve set yourself up, it’s time to solve that problem. What does your business do? You should present the name of your business in this step. How can your business help your market?
Step 4: The Market
Your audience wants to know who you are going to sell to and how large that market is. Basically an investor will want to see how big the opportunity is to make money. Don’t just throw a big number in there and say “the enterprise creation industry is a $50 billion industry and we plan on capturing 1% of it”–you will get accused of pulling this number out of the sky.
Step 5: Revenue Model
Next your audience will want to know how your business plans to capitalize off that market? In other words, how does your business work/make money? Is it an e-commerce site? A service? Retail? Explain.
Example: cnn.com will publish expert advice, interviews with the most successful young entrepreneurs and offer discounts on services to help small business owners. The site will generate revenue from advertising and referral fees we negotiate from our most trusted vendors.
Step 6: Competitive Advantage
Why will your company succeed and what will be your secret to success? Investors want to know what competition exists and how you plan to differentiate yourself. This is your time to explain why there is room in the market for your product/service.
Step 7: Management
So by now your audience should believe in your product, but why should they bet on you? Who’s behind the product and why will your team be successful? Investors want to know your track record and want to see passion for your business. It’s better to have an “A team” and a “B idea”, than a “B team” and an “A idea”. Prove your credibility!
Example: Our founding team includes two young entrepreneurs who know just hard it is to start a business for the first time. Matt Wilson and Jared O’Toole have been featured everywhere from Entrepreneur to The Wall Street Journal, have 4 years experience running the world’s #1 Collegiate Entrepreneurs’ Organization and consult for digital marketing clients across the country.
Step 8: Finances
Investors want to know when you will be profitable, how long it will take you to make money and how much money you can expect to make. Investors know that these are just estimates and that when you are in a startup you really can only go by your best guess, but don’t tell someone you are going to make $10 million in your first 6 months or you’ll be laughed at.
If you are already profitable tell them how much money you are making and how their investment will help you create more profits.
Example: Facebook has been profitable for X months and has made $xxx,xxx in advertising and revenue sharing profits. The company plans on creating revenues of $x,xxx,xxx by the end of 2011.
Step 9: What is your exit strategy?
Your investors want to know how they will cash out on their investment. Are you looking to sell the company? IPO? Merge with another company? What are your goals?
Step 10: The Ask
Be sure to tell your audience what their investment will be used for. This is your time to close the deal. If you want a business card, an investment or to set up a meeting you’ll need to prompt them and ask. Be as specific as possible with your ask especially if it is for money. Be direct when closing the deal.
Example: We are seeking investment of $xxx,xxx to hire a full time developer, sales team and upgrade our Manhattan office space.
Makes Sense??
Here's how four ultra-successful twentysomethings leveraged their brilliant ideas into major businesses online. DAMN man world is flat...
Out of Her Closet, a $50 Million Business
Susan Gregg was 17 and heading off to Carnegie Mellon University, and she had a problem: a closet overstuffed with one-of-a-kind vintage shoes and dresses. The solution? Open an online boutique.
ModCloth.com was headquartered in her dorm room and run with the help of her high school sweetheart, Eric Koger. The two drove from Pittsburgh to their South Florida hometown several times throughout college to haul up stock. By the end of their senior year in 2006, ModCloth was getting 60,000 visitors a month, and plenty of them were asking for more.
Gregg--a double major in German and business, and now married to Koger--knew what to do. First, she raised the capital: $50,000 in credit card debt, plus loans from Koger's uncles, student loans and a second mortgage. Then she hired designers to create an original, vintage-inspired collection. "I Googled, 'Where can I buy wholesale clothing?'" Gregg-Koger recalls. She found the Magic Trade Show in Las Vegas, wandered the booths, asked questions and found her designers.
These days, as co-founder and chief creative officer, Gregg-Koger, 25, still handpicks all the clothes, shoes and accessories featured on the site (most sell for less than $100) and seeks out designers who fit ModCloth's aesthetic. Koger, the CEO, oversees the technical side. The site gets around 2 million visitors every month and is on track to surpass $50 million in sales this year. They've raised $20 million in new funding to open up offices in San Francisco and Los Angeles this summer, and employee numbers are close to 150, and rising.
Gregg-Koger says ModCloth's biggest advantage is the fact that she is ModCloth's ideal customer: "Other companies might say, 'We need to get on this social networking stuff,' whereas it was intuitive for us. If I have a Facebook account, and my friends do, my business should."
ModCloth's future is "social commerce," she adds. That is, in developing a site that involves customers even if they're not actually buying. ModCloth recently introduced a "Be the Buyer" program, which lets customers choose which styles go into production, and a "Name It and Win It" contest. The idea is to leverage crowdsourcing and encourage customers to share and comment--and get excited about clothes that will be available in a few months.
"But that's like version 0.5," she says. "There's a lot more coming." --Jennifer Wang
The Patriarch of Mobile Location
Loopt is a quintessential expression of a generation shaped by mobility, interactivity and constant connectivity. In other words, it's the kind of innovation that could only spring from a mind as youthful as Sam Altman's. "People often try to build things for themselves first," says Altman, Loopt's 25-year-old co-founder and CEO. "I built this for my friends."
The social-mapping service Altman created when he was a sophomore at Stanford University offers users a real-time virtual lifeline to nearby friends, their present whereabouts and activities. The mobile app's utility is bolstered by details about local attractions and events, including travel directions and reviews from content partners such as Zagat and Citysearch. Loopt also instantly shares status updates with Facebook and Twitter contacts, and even lets users browse profiles of potential new friends within a given area.
Altman is a veteran of the mobile social networking revolution: Founded in 2005, Loopt pre-dates Foursquare, Gowalla and Brightkite by several years. And in what is now a hotly competitive realm, Loopt's focus is product innovation: In June the Mountain View, Calif., company launched Loopt Star, a game that awards users coupons, music downloads and perks in exchange for their checking in to the service from specific destinations. Altman compares Star to a virtual loyalty card that lets retailers connect directly with customers while they're shopping or looking for a place to eat. The user with the most check-ins at a specific site is the "Boss" of that location, further driving repeat business.
Loopt has garnered more than $17 million in venture financing so far. The company doesn't disclose financial figures, but sales come from content partners and retailers, along with local advertising--which is where the biggest growth opportunity lies.
The Loopt app is available as a free download on more than 100 mobile handset models offered by all four major U.S. providers, including the iPhone. The Loopt network now connects more than 4 million registered users, with hundreds of thousands more signing up each month. Altman expects Loopt to continue to grow at a significant rate throughout 2010.
"Now that mobile phones are a fundamental communications device, the concept of place is becoming increasingly important," he says. "Smartphones are transformational things." --Jason Ankeny
Marketing Guru for the Digital Age
Michael Mothner was on the last round of interviews for a coveted job as an analyst at Goldman Sachs in New York. The managing director looked over his résumé and noticed a company called Wpromote, which Mothner said he had started and had some success with as a sophomore at Dartmouth in 2001. "To call my bluff, he asked why I would want to work for Goldman if my company had been successful," says Mothner, now 29. "That was a defining moment for me. I stood up and said, 'You know what? You're right. I don't think this job is right for me.'"
After recovering from the shock, he began building Wpromote, a search engine marketing company that then offered a cheap platform for submitting websites to multiple search engines. This was 2004, and Google was just coming on--but Mothner foresaw its dominance. "I was having a lot of success using Google's pay-per-click services to drive traffic to my company," he says. "So I came to the conclusion that there was a market for helping consult and manage these PPC campaigns for other people."
Wpromote did just that, launching a tiered service that helped people create PPC campaigns, choose keywords and manage bids. In the process, Mothner and his team were learning a lot about what elements helped websites get better Google rankings, so Wpromote offered a search engine optimization service too.
The strategy paid off: Wpromote rocketed from $500,000 in sales in '04 to $2.8 million in '05 and $6.2 million by 2007. Then the economy went south, but Mothner barreled ahead anyway.
Today Wpromote, based in El Segundo, Calif., has 62 employees providing PPC, SEO, web development and social media advertising to 2,300 clients, including Hewlett-Packard. It had $8.5 million in sales for 2009 and expects to book at least $12 million to $13 million this year. Plus, Mothner plans to run Wpromote as if he will own it forever: "I think it is dangerous when people build companies with the sole intention of selling them." --Joel Holland
The New Food Democracy
There's a Spanish proverb that says, "The belly rules the mind," but sometimes the two operate in perfect harmony. Just ask Emily Olson: While working as a brand manager for The Fresh Market, a gourmet supermarket chain, she saw how artisanal food startups struggled to land on retailers' shelves.
"Just because something tastes awesome doesn't mean it can make it into stores," Olson says. "So I started thinking 'How do we democratize this?'"
Olson, now 26, teamed up with Rob LaFave, 27, and Nik Bauman, 26--friends who shared entrepreneurial ambitions dating back to their time at Virginia Tech. Their search for alternative distribution models led online, a natural progression for twentysomethings raised in the Amazon.com era. The result, inspired by the crafts site Etsy, is Foodzie, a web marketplace that connects small vendors with shoppers across the U.S.
Foodzie offers small producers a free platform--a virtual farmer's market--to promote and distribute their meats, cheeses, produce, snacks and sweets. Vendors can set up their online storefronts, complete with photos and the philosophies behind their products. Foodzie processes all transactions, even sending sellers prepaid shipping labels once a purchase is complete.
"Our products come from people who are passionate about what they're making--often there's a story behind what they're doing, like a family recipe," Olson says. "We want products with a personal connection. And we want them to be delicious, not mass-produced."
She and her fellow Foodzies developed the model under the auspices of the Boulder, Colo., incubator TechStars. Their mentor, Jeff Clavier, founder and managing partner of SoftTech VC, later spearheaded a $1 million seed investment in the San Francisco-based platform, which went live in December 2008.
Foodzie hosts nearly 400 sellers nationwide and claims a 20 percent cut of all purchases made through the site. Though Foodzie doesn't disclose revenue, Olson says midway through 2010, Foodzie is on track to quadruple its 2009 sales. Top sellers include the Skillet Bacon Jam ($37) and Cheesecakes in a Jar ($36.45).
Now Olson and company are exploring ways to help vendors distribute their products both online and in stores--and not limiting Foodzie to being a direct-to-consumer distributor.
"Our mission is to help smaller food producers become bigger businesses," she says. "There is growing consumer awareness that you can still support small producers without breaking your budget. More than ever, people really care about where their food comes from."
Out of Her Closet, a $50 Million Business
Susan Gregg was 17 and heading off to Carnegie Mellon University, and she had a problem: a closet overstuffed with one-of-a-kind vintage shoes and dresses. The solution? Open an online boutique.
ModCloth.com was headquartered in her dorm room and run with the help of her high school sweetheart, Eric Koger. The two drove from Pittsburgh to their South Florida hometown several times throughout college to haul up stock. By the end of their senior year in 2006, ModCloth was getting 60,000 visitors a month, and plenty of them were asking for more.
Gregg--a double major in German and business, and now married to Koger--knew what to do. First, she raised the capital: $50,000 in credit card debt, plus loans from Koger's uncles, student loans and a second mortgage. Then she hired designers to create an original, vintage-inspired collection. "I Googled, 'Where can I buy wholesale clothing?'" Gregg-Koger recalls. She found the Magic Trade Show in Las Vegas, wandered the booths, asked questions and found her designers.
These days, as co-founder and chief creative officer, Gregg-Koger, 25, still handpicks all the clothes, shoes and accessories featured on the site (most sell for less than $100) and seeks out designers who fit ModCloth's aesthetic. Koger, the CEO, oversees the technical side. The site gets around 2 million visitors every month and is on track to surpass $50 million in sales this year. They've raised $20 million in new funding to open up offices in San Francisco and Los Angeles this summer, and employee numbers are close to 150, and rising.
Gregg-Koger says ModCloth's biggest advantage is the fact that she is ModCloth's ideal customer: "Other companies might say, 'We need to get on this social networking stuff,' whereas it was intuitive for us. If I have a Facebook account, and my friends do, my business should."
ModCloth's future is "social commerce," she adds. That is, in developing a site that involves customers even if they're not actually buying. ModCloth recently introduced a "Be the Buyer" program, which lets customers choose which styles go into production, and a "Name It and Win It" contest. The idea is to leverage crowdsourcing and encourage customers to share and comment--and get excited about clothes that will be available in a few months.
"But that's like version 0.5," she says. "There's a lot more coming." --Jennifer Wang
The Patriarch of Mobile Location
Loopt is a quintessential expression of a generation shaped by mobility, interactivity and constant connectivity. In other words, it's the kind of innovation that could only spring from a mind as youthful as Sam Altman's. "People often try to build things for themselves first," says Altman, Loopt's 25-year-old co-founder and CEO. "I built this for my friends."
The social-mapping service Altman created when he was a sophomore at Stanford University offers users a real-time virtual lifeline to nearby friends, their present whereabouts and activities. The mobile app's utility is bolstered by details about local attractions and events, including travel directions and reviews from content partners such as Zagat and Citysearch. Loopt also instantly shares status updates with Facebook and Twitter contacts, and even lets users browse profiles of potential new friends within a given area.
Altman is a veteran of the mobile social networking revolution: Founded in 2005, Loopt pre-dates Foursquare, Gowalla and Brightkite by several years. And in what is now a hotly competitive realm, Loopt's focus is product innovation: In June the Mountain View, Calif., company launched Loopt Star, a game that awards users coupons, music downloads and perks in exchange for their checking in to the service from specific destinations. Altman compares Star to a virtual loyalty card that lets retailers connect directly with customers while they're shopping or looking for a place to eat. The user with the most check-ins at a specific site is the "Boss" of that location, further driving repeat business.
Loopt has garnered more than $17 million in venture financing so far. The company doesn't disclose financial figures, but sales come from content partners and retailers, along with local advertising--which is where the biggest growth opportunity lies.
The Loopt app is available as a free download on more than 100 mobile handset models offered by all four major U.S. providers, including the iPhone. The Loopt network now connects more than 4 million registered users, with hundreds of thousands more signing up each month. Altman expects Loopt to continue to grow at a significant rate throughout 2010.
"Now that mobile phones are a fundamental communications device, the concept of place is becoming increasingly important," he says. "Smartphones are transformational things." --Jason Ankeny
Marketing Guru for the Digital Age
Michael Mothner was on the last round of interviews for a coveted job as an analyst at Goldman Sachs in New York. The managing director looked over his résumé and noticed a company called Wpromote, which Mothner said he had started and had some success with as a sophomore at Dartmouth in 2001. "To call my bluff, he asked why I would want to work for Goldman if my company had been successful," says Mothner, now 29. "That was a defining moment for me. I stood up and said, 'You know what? You're right. I don't think this job is right for me.'"
After recovering from the shock, he began building Wpromote, a search engine marketing company that then offered a cheap platform for submitting websites to multiple search engines. This was 2004, and Google was just coming on--but Mothner foresaw its dominance. "I was having a lot of success using Google's pay-per-click services to drive traffic to my company," he says. "So I came to the conclusion that there was a market for helping consult and manage these PPC campaigns for other people."
Wpromote did just that, launching a tiered service that helped people create PPC campaigns, choose keywords and manage bids. In the process, Mothner and his team were learning a lot about what elements helped websites get better Google rankings, so Wpromote offered a search engine optimization service too.
The strategy paid off: Wpromote rocketed from $500,000 in sales in '04 to $2.8 million in '05 and $6.2 million by 2007. Then the economy went south, but Mothner barreled ahead anyway.
Today Wpromote, based in El Segundo, Calif., has 62 employees providing PPC, SEO, web development and social media advertising to 2,300 clients, including Hewlett-Packard. It had $8.5 million in sales for 2009 and expects to book at least $12 million to $13 million this year. Plus, Mothner plans to run Wpromote as if he will own it forever: "I think it is dangerous when people build companies with the sole intention of selling them." --Joel Holland
The New Food Democracy
There's a Spanish proverb that says, "The belly rules the mind," but sometimes the two operate in perfect harmony. Just ask Emily Olson: While working as a brand manager for The Fresh Market, a gourmet supermarket chain, she saw how artisanal food startups struggled to land on retailers' shelves.
"Just because something tastes awesome doesn't mean it can make it into stores," Olson says. "So I started thinking 'How do we democratize this?'"
Olson, now 26, teamed up with Rob LaFave, 27, and Nik Bauman, 26--friends who shared entrepreneurial ambitions dating back to their time at Virginia Tech. Their search for alternative distribution models led online, a natural progression for twentysomethings raised in the Amazon.com era. The result, inspired by the crafts site Etsy, is Foodzie, a web marketplace that connects small vendors with shoppers across the U.S.
Foodzie offers small producers a free platform--a virtual farmer's market--to promote and distribute their meats, cheeses, produce, snacks and sweets. Vendors can set up their online storefronts, complete with photos and the philosophies behind their products. Foodzie processes all transactions, even sending sellers prepaid shipping labels once a purchase is complete.
"Our products come from people who are passionate about what they're making--often there's a story behind what they're doing, like a family recipe," Olson says. "We want products with a personal connection. And we want them to be delicious, not mass-produced."
She and her fellow Foodzies developed the model under the auspices of the Boulder, Colo., incubator TechStars. Their mentor, Jeff Clavier, founder and managing partner of SoftTech VC, later spearheaded a $1 million seed investment in the San Francisco-based platform, which went live in December 2008.
Foodzie hosts nearly 400 sellers nationwide and claims a 20 percent cut of all purchases made through the site. Though Foodzie doesn't disclose revenue, Olson says midway through 2010, Foodzie is on track to quadruple its 2009 sales. Top sellers include the Skillet Bacon Jam ($37) and Cheesecakes in a Jar ($36.45).
Now Olson and company are exploring ways to help vendors distribute their products both online and in stores--and not limiting Foodzie to being a direct-to-consumer distributor.
"Our mission is to help smaller food producers become bigger businesses," she says. "There is growing consumer awareness that you can still support small producers without breaking your budget. More than ever, people really care about where their food comes from."
a 8 Year OLD tech MOGUL---> SMASHING!!
The mobile app market has no age restrictions. Meet game developer Joseph Hudicka.
Joseph Hudicka needs to make about $999,500 more before he can claim the title of young millionaire, but he's still light-years ahead of his peers in terms of entrepreneurial success.
At the age of 8, Joseph has already joined the ranks of the tech elite: He has developed two applications for the iPhone. Pretty good for a kid who doesn't even own a mobile phone.
Joseph's first app, Puckz, went on sale in Apple's App Store in March. The game, which combines elements of chess and ice hockey, evolved from a homemade board game Joseph created three years earlier.
"I was getting bored with my other games and wanted to make my own," he says.
The explosive growth of mobile gaming inspired Joseph and his parents, Joseph Sr. and Lora, who live in Flemington, N.J., to translate Puckz to the iPhone platform, tapping mobile solutions partner [x]cube Labs to oversee the software development. Joseph supervised the creative process, suggesting color schemes, layouts and sound effects. And like every creative genius, he laments the technical limitations of the iPhone gaming experience. "I imagined Puckz in 3-D," he says.
Puckz successfully avoided the pitfalls of the notoriously labyrinthine App Store submission process, earning Apple's approval in just one day. Joseph's soccer-themed follow-up app, Goalz, spent several weeks in administrative limbo when Apple objected to its use of licensed trademarks. Even after Joseph removed the offending content, Apple still took its sweet time before lending its official endorsement in June. (Joseph's theory: "Maybe they slept in late and forgot about my app.")
As of the end of June, downloads of Joseph's two apps numbered nearly 800. After giving Apple its cut, he has netted $489. Joseph's parents gave him permission to buy an iPhone when his app sales reach the 1,000-download milestone.
Despite his early success in the tech world, it may be premature to pin Joseph as a budding entrepreneur. Right now, he's planning to make his mark as a professional hockey player--or maybe a pro bowler. Either way, life as a software magnate may not be in the cards, because, Joseph says, "I've already done that."
Joseph Hudicka needs to make about $999,500 more before he can claim the title of young millionaire, but he's still light-years ahead of his peers in terms of entrepreneurial success.
At the age of 8, Joseph has already joined the ranks of the tech elite: He has developed two applications for the iPhone. Pretty good for a kid who doesn't even own a mobile phone.
Joseph's first app, Puckz, went on sale in Apple's App Store in March. The game, which combines elements of chess and ice hockey, evolved from a homemade board game Joseph created three years earlier.
"I was getting bored with my other games and wanted to make my own," he says.
The explosive growth of mobile gaming inspired Joseph and his parents, Joseph Sr. and Lora, who live in Flemington, N.J., to translate Puckz to the iPhone platform, tapping mobile solutions partner [x]cube Labs to oversee the software development. Joseph supervised the creative process, suggesting color schemes, layouts and sound effects. And like every creative genius, he laments the technical limitations of the iPhone gaming experience. "I imagined Puckz in 3-D," he says.
Puckz successfully avoided the pitfalls of the notoriously labyrinthine App Store submission process, earning Apple's approval in just one day. Joseph's soccer-themed follow-up app, Goalz, spent several weeks in administrative limbo when Apple objected to its use of licensed trademarks. Even after Joseph removed the offending content, Apple still took its sweet time before lending its official endorsement in June. (Joseph's theory: "Maybe they slept in late and forgot about my app.")
As of the end of June, downloads of Joseph's two apps numbered nearly 800. After giving Apple its cut, he has netted $489. Joseph's parents gave him permission to buy an iPhone when his app sales reach the 1,000-download milestone.
Despite his early success in the tech world, it may be premature to pin Joseph as a budding entrepreneur. Right now, he's planning to make his mark as a professional hockey player--or maybe a pro bowler. Either way, life as a software magnate may not be in the cards, because, Joseph says, "I've already done that."
7 Myths of Starting Up – Busted here! ---> By Alok Kejriwal, CEO , games2win.com
Myth 1 – I have a great idea but I can’t share it coz someone will steal it.
Oh man, if that were the case, then dreams would be the most expensive commodity on the planet.
Salvador Dali- the father of Surrealism slept on a couch with a spoon in his mouth. He would start dreaming up crazy ideas and as he would drift into his sleep, the spoon would slip out of his mouth, fall on the floor and wake him up. He would immediately get up, rush to his canvas to paint what he had just dreamt. The million $$ Dalis that exist today are paintings, not dreams.
Truth – An idea is worth nothing. Execute. Execute. Execute to make it valuable.
Myth 2 – When do I approach the investors? Hmmmm… What’s the best ‘timing’?
Huh?? Were you Sleep Walking?
If only investors were like the Black and Yellow Mumbai cabs that you can hail and get into any time you want!
No VC or Investor is waiting with bated breath biting her fingernails for you to call! It’s quite the opposite scene actually. In a booming Economy (like India), investors are deluged with lots of high quality and established business investment options, so you have to fight hard to get into the VC’s visitor’s area to begin with!
Truth – Capital Chases Entrepreneurs, not the other way around. Invest all your energies in building a GREAT business. Everyone will be ringing your doorbell.
Myth 3 – I have no money to start. (Sniff Sniff).
Most new business ideas today really need very little capital. If you are thinking of starting an Internet enabled business, the cloud takes away all the pain of investments. Domains cost less than 20 US$, and the rest of it is almost free. Sites like WordPress and their plugins can get you a fully loaded website up and running in a few thousand rupees spent.
Sure, if you have a more Capital Intensive business idea, then think really hard. Start Ups don’t survive on Love and Fresh Air. They need real hard cash. If you are on the Poverty Line, don’t attempt to start up. There will be better times to be more adventurous.
Truth – Be ready to sacrifice a good couple of years’ earnings into starting up and not looking like someone who lost all her baggage after a 24 hour flight. Once you have the cushion of 2 years’ savings, a lot more confidence will seep into your decision-making and improve your risk taking capabilities. Also Budget your Burn to say last for a year or whatever be your test horizon. That discipline will go a long way even after you get funded.
Myth 4 – Let me Grow First. Revenues can come Later.
Oops. That’s the spine breaker.
Unless you have a massive, massive overnight hit like a Twitter or Facebook, tread the ‘growth first, revenue last’ road with caution.
You may be suffering from a deep-seated insecurity to generate revenues and conveniently shoving that fear under the carpet by postponing revenue generation. It’s like hiding a body in the deep freezer and hoping that it will never be found.
Generating revenues is a real PAIN. And it’s best confronted in parallel to building your business. In fact, so many extra features of your service or enterprise may never be needed if you listen to the fat men with the cheques books early on. Also, as investors, partners, and potential acquirers start noticing your business, they look your Generating Revenue Experience (GRE) scores. If you didn’t apply for the exam, you wont get in.
Truth – Get that begging bowl out. Try and test (if you want to maintain Facebook like early start up Virginity) what people will pay for – but make sure that you know where the light switches are when the darkness arrives.
Myth 5 – I’m a techie – I don’t know anything about business. I am a business guy, I don’t know anything about technology!
Then learn!!
The demons of the mind that say that you don’t know how ‘business’ works need to be exterminated on day zero of starting up. Look all around you – the greatest geeks in the world – Steve Jobs, Bill Gates, The Google Twins, Marc Z – all have understood the science of business better than anybody else.
Also, for a M.Com dud like myself, today, technology and self -serve platforms have become so easy to understand and implement, they are like those do it yourself Lego Puzzles. All you need is the patience to sit down and assemble the rocket you are trying to build step by step. Read the instructions carefully and you will be set.
Truth – No entrepreneur can be in-complete. This is actually also the first step in becoming an entrepreneur – understanding a domain that you otherwise had no clue of.
Note – I am not suggesting mastering all domains, but rather just understanding them.
Myth 6 – Professionals whom I want are too expensive to hire.
Did you ask them? Did you look into their eyes and explain your invention and what can happen with it?
So many of the ‘been there, done that’ types are so bored and stuck en-cashing salary cheques every month. They are waiting for folks like you to go up to them and redeem them! I meet so many professionals (earning much more than me) ever so often who say
‘Wow Alok, I wish I could be doing the exciting and innovative things you and your Company do’!
Truth – Professionals with big compensation packages may not quit their job in a hurry for your Love Songs, but they can certainly begin associating with you. Start meeting them and burrow into their experiences. Shed a few shares and get them on your board. You may even realize that you never needed them full time!
Myth 7 – I HAVE TO make this work. (Stomping of feet on the floor heard).
Once in a while, when you sample a new restaurant or cuisine, you do risk getting in there, and ordering a meal you have never tasted before. In the first few bites, you know if it is a ‘disastrous’, a ‘will do, let’s get this done with’ or a ‘wow’ meal.
In a start up land, while your dreams may have taken you to heaven in a first class seat, when you actually implement the idea and hit execution, you may land up in rubble, deep under the ground.
Do not deny the ‘badness’ of the idea or the common sensical fact that ‘this was a bet that should not have been played’. Enterprises are built on hypothesis. If even a couple of assumptions or facts (which are crucial to business) don’t turn out the way as per your expectations, ditch the business, kill all engines, sit back and revise the learnings earned.
Truth – Get out, as soon as you see smoke. Don’t put on a mask and enter the fire pretending to be a firefighter. You will not come out alive and your soul will be too charred to boot up again.
Oh man, if that were the case, then dreams would be the most expensive commodity on the planet.
Salvador Dali- the father of Surrealism slept on a couch with a spoon in his mouth. He would start dreaming up crazy ideas and as he would drift into his sleep, the spoon would slip out of his mouth, fall on the floor and wake him up. He would immediately get up, rush to his canvas to paint what he had just dreamt. The million $$ Dalis that exist today are paintings, not dreams.
Truth – An idea is worth nothing. Execute. Execute. Execute to make it valuable.
Myth 2 – When do I approach the investors? Hmmmm… What’s the best ‘timing’?
Huh?? Were you Sleep Walking?
If only investors were like the Black and Yellow Mumbai cabs that you can hail and get into any time you want!
No VC or Investor is waiting with bated breath biting her fingernails for you to call! It’s quite the opposite scene actually. In a booming Economy (like India), investors are deluged with lots of high quality and established business investment options, so you have to fight hard to get into the VC’s visitor’s area to begin with!
Truth – Capital Chases Entrepreneurs, not the other way around. Invest all your energies in building a GREAT business. Everyone will be ringing your doorbell.
Myth 3 – I have no money to start. (Sniff Sniff).
Most new business ideas today really need very little capital. If you are thinking of starting an Internet enabled business, the cloud takes away all the pain of investments. Domains cost less than 20 US$, and the rest of it is almost free. Sites like WordPress and their plugins can get you a fully loaded website up and running in a few thousand rupees spent.
Sure, if you have a more Capital Intensive business idea, then think really hard. Start Ups don’t survive on Love and Fresh Air. They need real hard cash. If you are on the Poverty Line, don’t attempt to start up. There will be better times to be more adventurous.
Truth – Be ready to sacrifice a good couple of years’ earnings into starting up and not looking like someone who lost all her baggage after a 24 hour flight. Once you have the cushion of 2 years’ savings, a lot more confidence will seep into your decision-making and improve your risk taking capabilities. Also Budget your Burn to say last for a year or whatever be your test horizon. That discipline will go a long way even after you get funded.
Myth 4 – Let me Grow First. Revenues can come Later.
Oops. That’s the spine breaker.
Unless you have a massive, massive overnight hit like a Twitter or Facebook, tread the ‘growth first, revenue last’ road with caution.
You may be suffering from a deep-seated insecurity to generate revenues and conveniently shoving that fear under the carpet by postponing revenue generation. It’s like hiding a body in the deep freezer and hoping that it will never be found.
Generating revenues is a real PAIN. And it’s best confronted in parallel to building your business. In fact, so many extra features of your service or enterprise may never be needed if you listen to the fat men with the cheques books early on. Also, as investors, partners, and potential acquirers start noticing your business, they look your Generating Revenue Experience (GRE) scores. If you didn’t apply for the exam, you wont get in.
Truth – Get that begging bowl out. Try and test (if you want to maintain Facebook like early start up Virginity) what people will pay for – but make sure that you know where the light switches are when the darkness arrives.
Myth 5 – I’m a techie – I don’t know anything about business. I am a business guy, I don’t know anything about technology!
Then learn!!
The demons of the mind that say that you don’t know how ‘business’ works need to be exterminated on day zero of starting up. Look all around you – the greatest geeks in the world – Steve Jobs, Bill Gates, The Google Twins, Marc Z – all have understood the science of business better than anybody else.
Also, for a M.Com dud like myself, today, technology and self -serve platforms have become so easy to understand and implement, they are like those do it yourself Lego Puzzles. All you need is the patience to sit down and assemble the rocket you are trying to build step by step. Read the instructions carefully and you will be set.
Truth – No entrepreneur can be in-complete. This is actually also the first step in becoming an entrepreneur – understanding a domain that you otherwise had no clue of.
Note – I am not suggesting mastering all domains, but rather just understanding them.
Myth 6 – Professionals whom I want are too expensive to hire.
Did you ask them? Did you look into their eyes and explain your invention and what can happen with it?
So many of the ‘been there, done that’ types are so bored and stuck en-cashing salary cheques every month. They are waiting for folks like you to go up to them and redeem them! I meet so many professionals (earning much more than me) ever so often who say
‘Wow Alok, I wish I could be doing the exciting and innovative things you and your Company do’!
Truth – Professionals with big compensation packages may not quit their job in a hurry for your Love Songs, but they can certainly begin associating with you. Start meeting them and burrow into their experiences. Shed a few shares and get them on your board. You may even realize that you never needed them full time!
Myth 7 – I HAVE TO make this work. (Stomping of feet on the floor heard).
Once in a while, when you sample a new restaurant or cuisine, you do risk getting in there, and ordering a meal you have never tasted before. In the first few bites, you know if it is a ‘disastrous’, a ‘will do, let’s get this done with’ or a ‘wow’ meal.
In a start up land, while your dreams may have taken you to heaven in a first class seat, when you actually implement the idea and hit execution, you may land up in rubble, deep under the ground.
Do not deny the ‘badness’ of the idea or the common sensical fact that ‘this was a bet that should not have been played’. Enterprises are built on hypothesis. If even a couple of assumptions or facts (which are crucial to business) don’t turn out the way as per your expectations, ditch the business, kill all engines, sit back and revise the learnings earned.
Truth – Get out, as soon as you see smoke. Don’t put on a mask and enter the fire pretending to be a firefighter. You will not come out alive and your soul will be too charred to boot up again.
Wednesday, December 1, 2010
Virtual Classroom and Facebook?? u mean studying on Facebook?
The Rise of the Virtual Classroom
Three Washington University alumni create a social-media platform for online educational resources and learn how to attract investor interest.
Imagine a world where teachers and professors use platforms like Facebook to communicate with students--not too much of a stretch in this social media age. That's the concept of Schoology.com, an online platform that marries social media and electronic classroom management.
The service provides a full suite of "learning management" tools, including attendance records, tests and quizzes and homework drop boxes, that are designed to use social media to facilitate classroom interaction. It even offers cross-school networking, allowing schools to collaborate in shared classes, groups and discussions. In June, the brains behind Schoology landed $1.25 million in Series A funding.
The platform is the creation of three 23-year-old alumni of Washington University in St. Louis: Jeremy Friedman, Ryan Hwang and Tim Trinidad. They developed an early version of the platform--really just a place to share notes and ideas--in early 2009 when they were still in school. Once it was released commercially that August, demand for more features and functionality grew.
"Students--particularly high school students--wanted to use it more as a collaborative space, and teachers were coming to us to take advantage of that," Friedman says. "We saw an opportunity to create a really interactive and social connection between the two."
They knew they needed cash to grow. The team already was on the radar of Alan Veeck at Sewickley, Penn., venture firm Meakem Becker. Veeck had become aware of the team when it applied to the Pittsburgh accelerator AlphaLab, which works with six startups over the course of six months to help them get established.
Schoology opted to relocate to New York and use an angel investor to get started, but Veeck was impressed and stayed involved.
"Friedman's specific experience in the development realm makes him kind of the MacGyver--he can make anything work and has strong sales skills," Veeck says. "Trinidad is the classically trained software engineer who programs with beauty and elegance and in the way that Google would want to see things programmed. Hwang brings an art in design and product. Their skills complement each other very well."
When it came time for the three to get serious about VC money, they didn't forget who had helped them and turned to Meakem Becker to lead the round. Schoology already has hired four more people to keep up with changes in technology. The service now has more than 2,400 schools nationwide in its system. Friedman says next up is building out interactive content that teachers can use to support course materials, and enhancing parent-focused access.
"Every day we get more and more excited and more and more motivated," Friedman says. "It is a tremendous market and it has been neglected for so long."
Three Washington University alumni create a social-media platform for online educational resources and learn how to attract investor interest.
Imagine a world where teachers and professors use platforms like Facebook to communicate with students--not too much of a stretch in this social media age. That's the concept of Schoology.com, an online platform that marries social media and electronic classroom management.
The service provides a full suite of "learning management" tools, including attendance records, tests and quizzes and homework drop boxes, that are designed to use social media to facilitate classroom interaction. It even offers cross-school networking, allowing schools to collaborate in shared classes, groups and discussions. In June, the brains behind Schoology landed $1.25 million in Series A funding.
The platform is the creation of three 23-year-old alumni of Washington University in St. Louis: Jeremy Friedman, Ryan Hwang and Tim Trinidad. They developed an early version of the platform--really just a place to share notes and ideas--in early 2009 when they were still in school. Once it was released commercially that August, demand for more features and functionality grew.
"Students--particularly high school students--wanted to use it more as a collaborative space, and teachers were coming to us to take advantage of that," Friedman says. "We saw an opportunity to create a really interactive and social connection between the two."
They knew they needed cash to grow. The team already was on the radar of Alan Veeck at Sewickley, Penn., venture firm Meakem Becker. Veeck had become aware of the team when it applied to the Pittsburgh accelerator AlphaLab, which works with six startups over the course of six months to help them get established.
Schoology opted to relocate to New York and use an angel investor to get started, but Veeck was impressed and stayed involved.
"Friedman's specific experience in the development realm makes him kind of the MacGyver--he can make anything work and has strong sales skills," Veeck says. "Trinidad is the classically trained software engineer who programs with beauty and elegance and in the way that Google would want to see things programmed. Hwang brings an art in design and product. Their skills complement each other very well."
When it came time for the three to get serious about VC money, they didn't forget who had helped them and turned to Meakem Becker to lead the round. Schoology already has hired four more people to keep up with changes in technology. The service now has more than 2,400 schools nationwide in its system. Friedman says next up is building out interactive content that teachers can use to support course materials, and enhancing parent-focused access.
"Every day we get more and more excited and more and more motivated," Friedman says. "It is a tremendous market and it has been neglected for so long."
PUB on the wheelss....COOOOL IDEA which bcame a HIT!!
The PedalPub
It sounds like the wackiest idea ever: A bar on wheels powered by brew-pounding pedalers
Entrepreneurs: Eric Olson and Al Boyce, dedicated home brewers with day jobs--Olson teaches business at Normandale Community College in Bloomington, Minn., and Boyce is a computer programmer for U.S. Bank in St. Paul, Minn.
What Possessed Them: A fellow home brewer e-mailed Olson a photo of a crazy-looking pub on wheels in Europe. "I said, ‘Damn, this is one of the coolest things I've ever seen in my life.'" He tracked down the creators--brothers Henk and Zwier van Laar in (where else?) Amsterdam--and asked how to make one. They sold him one instead.
"Aha" Moment:: In 2007, they got the first PedalPub rolling and sent e-mails out to friends and family, expecting a mild reaction. "But our e-mail list started to explode," Olson says. "And that's when I had the first inkling that this might be really successful."
Startup: Savings and home-equity loans covered the $40,000 to buy their first PedalPub, plus $20,000 to buy a van, a trailer, insurance, storage and marketing materials.
Pedalmania: Olson and Boyce have six PedalPubs in the Twin Cities, one in Houston, plus licensees in Austin, Texas; Nashville, Tenn.; Lawrence, Kan., and Milwaukee; plus, one sold to Amstel Light.
Customers: Birthday parties, corporate events, even a wedding. Most are women--68 percent.
Vital Stats: PedalPubs weigh 2,340 pounds empty (without beer or drinkers) and have a top speed of 5 mph. They seat 10 pedalers, a bartender and a driver and rent for $160 to $190 per hour, BYOB.
2011 and Beyond: They plan to franchise the concept next year. Says Olson, "I'd love to see 500 of these things all over the country."
It sounds like the wackiest idea ever: A bar on wheels powered by brew-pounding pedalers
Entrepreneurs: Eric Olson and Al Boyce, dedicated home brewers with day jobs--Olson teaches business at Normandale Community College in Bloomington, Minn., and Boyce is a computer programmer for U.S. Bank in St. Paul, Minn.
What Possessed Them: A fellow home brewer e-mailed Olson a photo of a crazy-looking pub on wheels in Europe. "I said, ‘Damn, this is one of the coolest things I've ever seen in my life.'" He tracked down the creators--brothers Henk and Zwier van Laar in (where else?) Amsterdam--and asked how to make one. They sold him one instead.
"Aha" Moment:: In 2007, they got the first PedalPub rolling and sent e-mails out to friends and family, expecting a mild reaction. "But our e-mail list started to explode," Olson says. "And that's when I had the first inkling that this might be really successful."
Startup: Savings and home-equity loans covered the $40,000 to buy their first PedalPub, plus $20,000 to buy a van, a trailer, insurance, storage and marketing materials.
Pedalmania: Olson and Boyce have six PedalPubs in the Twin Cities, one in Houston, plus licensees in Austin, Texas; Nashville, Tenn.; Lawrence, Kan., and Milwaukee; plus, one sold to Amstel Light.
Customers: Birthday parties, corporate events, even a wedding. Most are women--68 percent.
Vital Stats: PedalPubs weigh 2,340 pounds empty (without beer or drinkers) and have a top speed of 5 mph. They seat 10 pedalers, a bartender and a driver and rent for $160 to $190 per hour, BYOB.
2011 and Beyond: They plan to franchise the concept next year. Says Olson, "I'd love to see 500 of these things all over the country."
Business Plan written BY PENCIL only!! How Logical is that?????? By Bob Reiss
I have a few words of advice for first-time entrepreneurs, as well as seasoned business owners looking to hit a new stage of growth. My advice is this; write your business plan in pencil. I realize this may be difficult for all you non-golfers, but doing so will illustrate two important principles.
1.Change is inevitable.
I have little doubt that you (the small-business owner) will shortly have to change, amend, modify, scrap or abandon your original business plan altogether. One of the attributes of successful entrepreneurs is flexibility. By writing your business plan in pencil it forces you to look at change as the only constant. Make change your friend, embrace it and work it to your benefit.
The reasons why your original plan will need to be changed after your company is operational are myriad. It's likely you under or over-estimated your competition, margins, cash needs, competencies and suppliers. Or you misjudged market need and size. Every entrepreneur discovers new opportunities that didn't appear until there was actually a business up and running.
2.We must avoid business plan worship.
When we see documents neatly typed (and maybe even received praise for them), we are reluctant to change. Especially for those who attended business schools where the plan took on a larger than life importance. People whose plans got high marks, or even worse, won a business plan contest, tend to feel their plan is inviolate. They also tend to believe that if they rigorously adhere to the plan it will yield the riches of their dreams. It's my hope that the mental image of a pencil will remind you that change is good and will help you reach your goals.
Most small-business owners that I know never wrote a business plan. In 16 start-ups, I've never written one. And John Altman, a very successful entrepreneur, founder of six companies and former professor of entrepreneurism, never wrote a business plan for his start-ups, either.
Most people who write a business plan do it to raise money or because someone told them that's what they're supposed to do. The fact is that a detailed plan is only required if you want to raise money from a bank or venture capitalist. And both hardly ever offer a loan or invest in early stage companies. So your energies are wasted writing those long and thick plans.
Now don't get me wrong. I strongly believe in planning, just not in long, voluminous tomes that will probably go unread. For most sole proprietors, that business plan can reside in your head, or--if you must commit it to paper--on a napkin.
If you really want to write a plan, try this. At the start of each year write what your goals are and specifically target new areas of distribution and the names of new accounts that you want to clinch. Also, put on paper the names of current customers with whom you want a deeper relationship and the strategies you'll employ to do so. This plan should only run one or two pages. I also recommend you write down your accomplishments and shortcomings from the previous year. While you can do this exercise primarily for yourself, I would also share it with members of my team.
As your company gets bigger, that's when those written planning documents become paramount. As your company grows you want to be sure all your employees are on the same page and equipped with the knowledge of how they can contribute to the company goals.
It is a reversal of commonly accepted logic to suggest you postpone the business plan until you've reached a growth spurt. But, as John Altman said on this point, "If you're going to empower the other people in your company, guess what; you'd better give them a map to the highway you're on! Otherwise, they can't share that vision in your brain."
What does that mean DUDES ???
1.Change is inevitable.
I have little doubt that you (the small-business owner) will shortly have to change, amend, modify, scrap or abandon your original business plan altogether. One of the attributes of successful entrepreneurs is flexibility. By writing your business plan in pencil it forces you to look at change as the only constant. Make change your friend, embrace it and work it to your benefit.
The reasons why your original plan will need to be changed after your company is operational are myriad. It's likely you under or over-estimated your competition, margins, cash needs, competencies and suppliers. Or you misjudged market need and size. Every entrepreneur discovers new opportunities that didn't appear until there was actually a business up and running.
2.We must avoid business plan worship.
When we see documents neatly typed (and maybe even received praise for them), we are reluctant to change. Especially for those who attended business schools where the plan took on a larger than life importance. People whose plans got high marks, or even worse, won a business plan contest, tend to feel their plan is inviolate. They also tend to believe that if they rigorously adhere to the plan it will yield the riches of their dreams. It's my hope that the mental image of a pencil will remind you that change is good and will help you reach your goals.
Most small-business owners that I know never wrote a business plan. In 16 start-ups, I've never written one. And John Altman, a very successful entrepreneur, founder of six companies and former professor of entrepreneurism, never wrote a business plan for his start-ups, either.
Most people who write a business plan do it to raise money or because someone told them that's what they're supposed to do. The fact is that a detailed plan is only required if you want to raise money from a bank or venture capitalist. And both hardly ever offer a loan or invest in early stage companies. So your energies are wasted writing those long and thick plans.
Now don't get me wrong. I strongly believe in planning, just not in long, voluminous tomes that will probably go unread. For most sole proprietors, that business plan can reside in your head, or--if you must commit it to paper--on a napkin.
If you really want to write a plan, try this. At the start of each year write what your goals are and specifically target new areas of distribution and the names of new accounts that you want to clinch. Also, put on paper the names of current customers with whom you want a deeper relationship and the strategies you'll employ to do so. This plan should only run one or two pages. I also recommend you write down your accomplishments and shortcomings from the previous year. While you can do this exercise primarily for yourself, I would also share it with members of my team.
As your company gets bigger, that's when those written planning documents become paramount. As your company grows you want to be sure all your employees are on the same page and equipped with the knowledge of how they can contribute to the company goals.
It is a reversal of commonly accepted logic to suggest you postpone the business plan until you've reached a growth spurt. But, as John Altman said on this point, "If you're going to empower the other people in your company, guess what; you'd better give them a map to the highway you're on! Otherwise, they can't share that vision in your brain."
What does that mean DUDES ???
getting MONEY for ur IDEA---> THATS A PAIN for sure!!
If you're a solo entrepreneur, your plan will cover your background and experience, as well as your vision for your company, your key customer targets and sales projections.
If you don't have a plan--why not?
Is your idea something you think will sell, or is it something people actually want to buy?
Have you tested your idea or product in your target market?
If you are having trouble answering these questions, you'll need to focus and work to get your answers together, because they are what potential investors will want to know before funding anything.
That said, in this economy, a lot of potential investors are staying on the sidelines looking for good opportunities, so it's the best time in a long time to reach out to them.
It's also a good time to approach friends, family, colleagues and others in your network for resources, because they may also be looking for an investment opportunity and might be interested in a good investment if your business plan and business model is sound--and if they believe they can get a better rate of return on a risky new business venture then they could in the current market.
Be aware, however, friends and family will be asking those same tough questions about your idea, your resources and your sales projections. Also remember in most cases they will be even more unforgiving than truly "outside" investors if something goes wrong or if the business fails.
If you've already got a good idea and a sound plan but you've exhausted your personal options, there are still a number of ways to find the capital you need. The simplest way is by simply starting small and bootstrap your way to cash flow and profitability.
You can do this a number of ways starting out, including requiring deposits for pre-orders or setting customers up on a paid up-front basis, with delivery in 15 to 45 days, depending on your product or service.
Just make sure you actually deliver, as many a well-meaning entrepreneur has faced the negative consequences in terms of reputation and legalities by failing to deliver on paid-in-advance products and services.
In the end, there are a lot of creative ways to fund your start-up enterprise. You just need to be open to asking others what those strategies could be, and be aggressive in making them work for you.
If you don't have a plan--why not?
Is your idea something you think will sell, or is it something people actually want to buy?
Have you tested your idea or product in your target market?
If you are having trouble answering these questions, you'll need to focus and work to get your answers together, because they are what potential investors will want to know before funding anything.
That said, in this economy, a lot of potential investors are staying on the sidelines looking for good opportunities, so it's the best time in a long time to reach out to them.
It's also a good time to approach friends, family, colleagues and others in your network for resources, because they may also be looking for an investment opportunity and might be interested in a good investment if your business plan and business model is sound--and if they believe they can get a better rate of return on a risky new business venture then they could in the current market.
Be aware, however, friends and family will be asking those same tough questions about your idea, your resources and your sales projections. Also remember in most cases they will be even more unforgiving than truly "outside" investors if something goes wrong or if the business fails.
If you've already got a good idea and a sound plan but you've exhausted your personal options, there are still a number of ways to find the capital you need. The simplest way is by simply starting small and bootstrap your way to cash flow and profitability.
You can do this a number of ways starting out, including requiring deposits for pre-orders or setting customers up on a paid up-front basis, with delivery in 15 to 45 days, depending on your product or service.
Just make sure you actually deliver, as many a well-meaning entrepreneur has faced the negative consequences in terms of reputation and legalities by failing to deliver on paid-in-advance products and services.
In the end, there are a lot of creative ways to fund your start-up enterprise. You just need to be open to asking others what those strategies could be, and be aggressive in making them work for you.
Entrepreneurship-->What makes for a successful entrepreneur?
That's a pretty open-ended question, but there are some general principles I can outline for you. First, you need a good vision for what you ultimately want your business to be, and that requires a certain amount of specificity and detail.
It's important to ask yourself these questions:
How big do you want your business to be, in terms of team, revenues and profits?
Does the industry or category you are entering support that vision?
Are you truly passionate and committed to your vision? Are you willing to do whatever it takes to achieve it?
Next, you need a product or service that people want to buy, and those people need to have the resources to actually buy it. Finally, you need to know the numbers for your venture.
How long will it take you to break-even?
How long before you start generating positive cash flow? Profit?
Do you have a systemized way to generate qualified leads?
How do you plan to get repeat business?
Do you know the pitfalls of discounting?
What's the "value" of added-value?
Are you willing to learn and be coached by people who actually know what they are doing in business, versus what you think you know about business?
Remember, more businesses fail from a lack of knowledge than a lack of capital. You can always make up for a lack of money with a good strategy, creative cashflow plans or good relationships with your vendors, suppliers and customers. But you can't make up for the lack of knowing how to make those things work to your advantage.
So be open to new ideas, work with a mentor or a coach and make sure the market is both willing and able to buy what you are selling. From there, it's just a matter of working toward your vision and your goals -- and having some fun along the way.
It's important to ask yourself these questions:
How big do you want your business to be, in terms of team, revenues and profits?
Does the industry or category you are entering support that vision?
Are you truly passionate and committed to your vision? Are you willing to do whatever it takes to achieve it?
Next, you need a product or service that people want to buy, and those people need to have the resources to actually buy it. Finally, you need to know the numbers for your venture.
How long will it take you to break-even?
How long before you start generating positive cash flow? Profit?
Do you have a systemized way to generate qualified leads?
How do you plan to get repeat business?
Do you know the pitfalls of discounting?
What's the "value" of added-value?
Are you willing to learn and be coached by people who actually know what they are doing in business, versus what you think you know about business?
Remember, more businesses fail from a lack of knowledge than a lack of capital. You can always make up for a lack of money with a good strategy, creative cashflow plans or good relationships with your vendors, suppliers and customers. But you can't make up for the lack of knowing how to make those things work to your advantage.
So be open to new ideas, work with a mentor or a coach and make sure the market is both willing and able to buy what you are selling. From there, it's just a matter of working toward your vision and your goals -- and having some fun along the way.
Mohammad Yunus :---> A Genius....
Muhammad Yunus is a Bangladeshi economist who founded the Grameen Bank in 1983 to provide credit to the poor. Access to credit, he believes, is a fundamental human right. Grameen Bank has 1,084 branches in Bangladesh and serves 2.1 million borrowers in 37,000 villages. On any working day, it collects an average of $1.5 million in weekly instalments. Over 94 percent of the borrowers are women and 98 percent of the loans are paid back. He was awarded the Nobel Prize for Peace in 2006.
The single most important action that will change the world is the complete eradication of poverty. As I have often said, poverty is the absence of human rights. Over 3 billion of the world’s 6.5 billion human beings live below the poverty line. These individuals do not have access to safe drinking water, food, shelter and clothing. Change comes in different forms, but the world can only change for the better once every single human is given the opportunity to survive.
The biggest flaw in the conceptual design of the existing theory lies in its misrepresentation of the human being. In traditional profit-maximising capitalism, human beings are treated as one-dimensional creatures whose only mission in life is to make as much money as possible. Fortunately, human beings are not money-making robots. The truth of the matter is that human beings are actually multi-dimensional beings: All beings have a selfish side. Their happiness comes from many directions, not just from making money. Human beings are selfish beings, but they are selfless beings too. This selfless dimension of human beings has no role in economics. We can easily include the selfless dimension into the theory, without disrupting any part of the existing theory, except a reinterpretation of the Homo Economicus.
Social business is a complement to traditional profit-maximising business. Social business takes into account the multidimensional nature of human beings and uses business principles to achieve one or more social goals. I define social business as a non-loss, non-dividend company dedicated entirely to achieve a social goal. All profits, or “surplus revenue” is ploughed back into the venture for expansion and improvement. In social business, the investor gets his or her investment money back over time, but never receives dividend beyond that amount. Where would social businesses find their start-up investments? An excellent, and probably most sensible, source would be philanthrpy money that
traditionally goes towards charities.
The primary problem with charity programmes is that they remain perpetually dependent on donations. They cannot stand on their feet. Charity money goes out to do good things, but that money never comes back. It is a one-way route. However, if a charity can be converted into a social business it becomes a powerful undertaking because now the money invested is recycled endlessly: A charity dollar has one life; a social business dollar has endless lives! That’s the power of social business. A social business is a business where an investor aims to help others without taking any financial gain himself, while generating enough income to cover costs.
Each level of government — international, national, state, and city — can create social business funds. These can encourage citizens and companies to create social businesses designed to address specific problems (unemployment, health, sanitation, pollution, old age, drugs, crime, disadvantaged groups such as the disabled, and so on). Bilateral and multilateral donors can also create social business funds. Foundations can earmark a percentage of their funds to support social businesses, and businesses can use their social responsibility budgets to fund social businesses.
Besides diversion of philanthropy money into social business, there will be plenty of other money coming as investments just to share the joy of making a difference in other people’s lives. People will not only come up with money, they will come up with their creativity, networking skill, technology, experience, and everything else they’ve got, once the theory accommodates the concept of social business in its structure. Once that happens, students will learn in their schools and colleges that there are two kinds of businesses: Business to make money and business to make a difference in other people’s lives. As they grow up they’ll start thinking what kind of company he or she will invest in, what kind of company he or she will work for, what kind of social business he or she would like to create.
The wonderful promise of social business makes it all the more important that we redefine and broaden our present economic framework to create the world that we all want. We don’t want to see our economic framework continue to pull us backwards. We need a new architecture of economics that will free us once and for all from the crises that surround us. Now is the time for bold and creative action — and we need to move fast, because the world is changing fast. The first piece of this new framework must be to accommodate social business as an integral part of the economic structure. In just a few short years, social business has developed from a mere idea into a living, rapidly growing reality. It is already bringing improvements into the lives of many people and is now on the verge of exploding into one of the world’s most important social and economic trends.
Everyone deserves an opportunity; where could the world be if those poor kids are given the chance to learn, to grow, to be all that they can be? Everyone on this planet suffers personally when anyone’s life is wasted. After all, the life that is wasted might have the potential to become the doctor who saves the life of my own family member, or the scientist who invents a device that will save the planet from global warming, or the artist who creates a magnificent work of art that will enrich the lives of all of us. Why should we waste that opportunity?
The time is right. The technology is right. The climate is right. Let’s take action, and replicate social businesses the world over. After all, what good is a beautiful seed if it is not scattered to the four winds?
The single most important action that will change the world is the complete eradication of poverty. As I have often said, poverty is the absence of human rights. Over 3 billion of the world’s 6.5 billion human beings live below the poverty line. These individuals do not have access to safe drinking water, food, shelter and clothing. Change comes in different forms, but the world can only change for the better once every single human is given the opportunity to survive.
The biggest flaw in the conceptual design of the existing theory lies in its misrepresentation of the human being. In traditional profit-maximising capitalism, human beings are treated as one-dimensional creatures whose only mission in life is to make as much money as possible. Fortunately, human beings are not money-making robots. The truth of the matter is that human beings are actually multi-dimensional beings: All beings have a selfish side. Their happiness comes from many directions, not just from making money. Human beings are selfish beings, but they are selfless beings too. This selfless dimension of human beings has no role in economics. We can easily include the selfless dimension into the theory, without disrupting any part of the existing theory, except a reinterpretation of the Homo Economicus.
Social business is a complement to traditional profit-maximising business. Social business takes into account the multidimensional nature of human beings and uses business principles to achieve one or more social goals. I define social business as a non-loss, non-dividend company dedicated entirely to achieve a social goal. All profits, or “surplus revenue” is ploughed back into the venture for expansion and improvement. In social business, the investor gets his or her investment money back over time, but never receives dividend beyond that amount. Where would social businesses find their start-up investments? An excellent, and probably most sensible, source would be philanthrpy money that
traditionally goes towards charities.
The primary problem with charity programmes is that they remain perpetually dependent on donations. They cannot stand on their feet. Charity money goes out to do good things, but that money never comes back. It is a one-way route. However, if a charity can be converted into a social business it becomes a powerful undertaking because now the money invested is recycled endlessly: A charity dollar has one life; a social business dollar has endless lives! That’s the power of social business. A social business is a business where an investor aims to help others without taking any financial gain himself, while generating enough income to cover costs.
Each level of government — international, national, state, and city — can create social business funds. These can encourage citizens and companies to create social businesses designed to address specific problems (unemployment, health, sanitation, pollution, old age, drugs, crime, disadvantaged groups such as the disabled, and so on). Bilateral and multilateral donors can also create social business funds. Foundations can earmark a percentage of their funds to support social businesses, and businesses can use their social responsibility budgets to fund social businesses.
Besides diversion of philanthropy money into social business, there will be plenty of other money coming as investments just to share the joy of making a difference in other people’s lives. People will not only come up with money, they will come up with their creativity, networking skill, technology, experience, and everything else they’ve got, once the theory accommodates the concept of social business in its structure. Once that happens, students will learn in their schools and colleges that there are two kinds of businesses: Business to make money and business to make a difference in other people’s lives. As they grow up they’ll start thinking what kind of company he or she will invest in, what kind of company he or she will work for, what kind of social business he or she would like to create.
The wonderful promise of social business makes it all the more important that we redefine and broaden our present economic framework to create the world that we all want. We don’t want to see our economic framework continue to pull us backwards. We need a new architecture of economics that will free us once and for all from the crises that surround us. Now is the time for bold and creative action — and we need to move fast, because the world is changing fast. The first piece of this new framework must be to accommodate social business as an integral part of the economic structure. In just a few short years, social business has developed from a mere idea into a living, rapidly growing reality. It is already bringing improvements into the lives of many people and is now on the verge of exploding into one of the world’s most important social and economic trends.
Everyone deserves an opportunity; where could the world be if those poor kids are given the chance to learn, to grow, to be all that they can be? Everyone on this planet suffers personally when anyone’s life is wasted. After all, the life that is wasted might have the potential to become the doctor who saves the life of my own family member, or the scientist who invents a device that will save the planet from global warming, or the artist who creates a magnificent work of art that will enrich the lives of all of us. Why should we waste that opportunity?
The time is right. The technology is right. The climate is right. Let’s take action, and replicate social businesses the world over. After all, what good is a beautiful seed if it is not scattered to the four winds?
Is the old partner "DOT COM" CRAZE BACK???
T hese are tough times for the US equity market. The fear of a double dip recession looms large. Investors are wary and quick to punish stocks for the slightest hint of shrinking margins or slowing growth rate. Nothing surprising; investors are still licking the wounds caused by the recent crisis.
But then how do you explain Makemytrip.com? On August 12, the online travel agency got listed in Nasdaq and raised $70 million from an initial offering of five million shares at $14 each. On the first day of trading, the share price rose 89 percent. In the days that followed, its market cap crossed a billion dollars. Investment Web sites called it the hottest IPO since 2007. Now, here’s the interesting part: The company has not made a single penny in annual profits so far. It lost $6.2 million in 2010, $7.3 million in 2009 and $18 million a year before, on revenues of $32 million, $19 million and $14 million, respectively. Makemytrip.com may be among the most talked about companies in the Internet space in recent times, but it is not the only one.
The valuation of Internet companies from emerging markets has gone up significantly in the last one year. While the Nasdaq composite index grew by about 12 percent in the last one year, in many cases share prices of these companies more than doubled. For example, share prices of eLong and ctrip — both online travel agencies — grew by about 131 percent and 69 percent respectively in the last one year. The market cap of Chinese search engine Baidu went up by over 154 percent in Nasdaq. Shares of 51job.com, a recruitment company, grew by 125 percent.
Their PE ratios — or the price per share over the net profits per share, an indicator of investor expectations — also suggest optimism. Nasdaq’s PE ratio is about 21. HiSoft, a Chinese technology company which recently listed in Nasdaq, has a PE of 933. eLong’s is 129, Ctrip’s 52, Baidu.com’s 88. (Google’s by way of comparison is 20.)
Nasdaq, the epicentre of technology stocks, is also getting busier. Forty-four companies (including 17 non-US companies) got listed in Nasdaq in 2010, compared to 27 (11 non-US) a year before, according to VCCEdge.
There is a buzz in India about public equity markets as well. Justdial.com, a local search firm, said that it’s going for an IPO early next year. According to reports, it is looking at a valuation of Rs. 2,000 crore, which is 22 times its 2009 revenue of Rs. 90 crore. There are indications of a public offering from Indiamart and Ybrant as well.
Venture capital firms are keen on this space too. “There is definitely elevated activity in terms of VC interest in Internet or e-commerce companies. The feeling seems to be that we are in the middle of something interesting from an e-commerce perspective. Whether that is the case or not, only time will tell. But I have definitely seen more interesting and serious Internet start-ups in the last three months than in the last three years that I have been in India,” says Mohanjit Jolly, MD, DFJ, which has invested in companies like Hotmail and Skype.
Satish Kataria, MD, Springboard Ventures, points to a Rs. 60 crore investment in Quick Heal Technologies by Sequoia Capital, Rs. 25 crore investment in Naaptol.com by Canaan Partners, Rs. 4.7 crore investment in Foodiebay.com by InfoEdge and $5 million funding in Vriti, a test preparation company, by Intel Capital and JAFCO Asia. Fifty-six percent of VCs surveyed by Deloitte recently said they expected increased investments in new media and social networking segments.
All these entrepreneurs and investors see Makemytrip’s successful IPO as a thumbs-up for Internet and e-commerce businesses.
Makemytrip.com founder and CEO Deep Kalra himself says he is trying not to get too carried away by the market valuation. “We priced the share at $14 and it’s trading at more than 100 percent. It’s a clear demand-supply ratio. We’ll do our bit in terms of making sure that the company delivers what it’s supposed to. After that, you can’t do much on the market. I continue to tell my team that: ‘Don’t look at the market. Focus on the work you have.’”
Bubble 2.0?
Those with a historical bent of mind will find it hard to ignore the timing of Makemytrip’s IPO. Exactly 15 years back, to the month, Netscape Communications got listed in Nasdaq. Business historians today agree that that was when the Internet bubble started. When Netscape listed, it had not made a single penny in profit either. On listing, Netscape shares boomed, making millionaires of its founders and early investors.
What followed in the next few months created new stars, throwing out the old rules on valuation. People left stable jobs to start their own ventures, with no clarity on how they could make money. Investors lost their sense of perspective. In 1998, one company, Books a Million, announced that it was going to launch an improved Web site. The result, its share prices went up 973 percent in just three days.
What is happening today carries some of the flavour of those heady days. Here are some similarities:
1. Eyeballs vs. revenues: During 1999-2000, eyeballs, or the page views a Web site attracted, became a widely tracked metric, and companies were valued based on that. Today, revenues has probably replaced eyeballs as the defining metric, says Sanjay Soni, MD of Logix Microsystems, which provides e-commerce solutions for the automotive industry and also runs Carazoo, an online car sales Web site. While it is an improvement over eyeballs, revenue by itself doesn’t say anything about the sustainability of a business. Many listed companies during the dotcom boom had revenues, but they failed because they were burning cash faster.
2. In Internet, we trust: The bubble in the late ’90s was sustained for a long time because people were essentially betting on the rapid adoption of the Internet rather than the business model of a specific company. Now, there is only a slight shift in that — now the bet seems to be on the deepening penetration of the Internet and the belief that e-commerce is closer to the inflection point (that critical point after which economics turns in their favour).
But then how do you explain Makemytrip.com? On August 12, the online travel agency got listed in Nasdaq and raised $70 million from an initial offering of five million shares at $14 each. On the first day of trading, the share price rose 89 percent. In the days that followed, its market cap crossed a billion dollars. Investment Web sites called it the hottest IPO since 2007. Now, here’s the interesting part: The company has not made a single penny in annual profits so far. It lost $6.2 million in 2010, $7.3 million in 2009 and $18 million a year before, on revenues of $32 million, $19 million and $14 million, respectively. Makemytrip.com may be among the most talked about companies in the Internet space in recent times, but it is not the only one.
The valuation of Internet companies from emerging markets has gone up significantly in the last one year. While the Nasdaq composite index grew by about 12 percent in the last one year, in many cases share prices of these companies more than doubled. For example, share prices of eLong and ctrip — both online travel agencies — grew by about 131 percent and 69 percent respectively in the last one year. The market cap of Chinese search engine Baidu went up by over 154 percent in Nasdaq. Shares of 51job.com, a recruitment company, grew by 125 percent.
Their PE ratios — or the price per share over the net profits per share, an indicator of investor expectations — also suggest optimism. Nasdaq’s PE ratio is about 21. HiSoft, a Chinese technology company which recently listed in Nasdaq, has a PE of 933. eLong’s is 129, Ctrip’s 52, Baidu.com’s 88. (Google’s by way of comparison is 20.)
Nasdaq, the epicentre of technology stocks, is also getting busier. Forty-four companies (including 17 non-US companies) got listed in Nasdaq in 2010, compared to 27 (11 non-US) a year before, according to VCCEdge.
There is a buzz in India about public equity markets as well. Justdial.com, a local search firm, said that it’s going for an IPO early next year. According to reports, it is looking at a valuation of Rs. 2,000 crore, which is 22 times its 2009 revenue of Rs. 90 crore. There are indications of a public offering from Indiamart and Ybrant as well.
Venture capital firms are keen on this space too. “There is definitely elevated activity in terms of VC interest in Internet or e-commerce companies. The feeling seems to be that we are in the middle of something interesting from an e-commerce perspective. Whether that is the case or not, only time will tell. But I have definitely seen more interesting and serious Internet start-ups in the last three months than in the last three years that I have been in India,” says Mohanjit Jolly, MD, DFJ, which has invested in companies like Hotmail and Skype.
Satish Kataria, MD, Springboard Ventures, points to a Rs. 60 crore investment in Quick Heal Technologies by Sequoia Capital, Rs. 25 crore investment in Naaptol.com by Canaan Partners, Rs. 4.7 crore investment in Foodiebay.com by InfoEdge and $5 million funding in Vriti, a test preparation company, by Intel Capital and JAFCO Asia. Fifty-six percent of VCs surveyed by Deloitte recently said they expected increased investments in new media and social networking segments.
All these entrepreneurs and investors see Makemytrip’s successful IPO as a thumbs-up for Internet and e-commerce businesses.
Makemytrip.com founder and CEO Deep Kalra himself says he is trying not to get too carried away by the market valuation. “We priced the share at $14 and it’s trading at more than 100 percent. It’s a clear demand-supply ratio. We’ll do our bit in terms of making sure that the company delivers what it’s supposed to. After that, you can’t do much on the market. I continue to tell my team that: ‘Don’t look at the market. Focus on the work you have.’”
Bubble 2.0?
Those with a historical bent of mind will find it hard to ignore the timing of Makemytrip’s IPO. Exactly 15 years back, to the month, Netscape Communications got listed in Nasdaq. Business historians today agree that that was when the Internet bubble started. When Netscape listed, it had not made a single penny in profit either. On listing, Netscape shares boomed, making millionaires of its founders and early investors.
What followed in the next few months created new stars, throwing out the old rules on valuation. People left stable jobs to start their own ventures, with no clarity on how they could make money. Investors lost their sense of perspective. In 1998, one company, Books a Million, announced that it was going to launch an improved Web site. The result, its share prices went up 973 percent in just three days.
What is happening today carries some of the flavour of those heady days. Here are some similarities:
1. Eyeballs vs. revenues: During 1999-2000, eyeballs, or the page views a Web site attracted, became a widely tracked metric, and companies were valued based on that. Today, revenues has probably replaced eyeballs as the defining metric, says Sanjay Soni, MD of Logix Microsystems, which provides e-commerce solutions for the automotive industry and also runs Carazoo, an online car sales Web site. While it is an improvement over eyeballs, revenue by itself doesn’t say anything about the sustainability of a business. Many listed companies during the dotcom boom had revenues, but they failed because they were burning cash faster.
2. In Internet, we trust: The bubble in the late ’90s was sustained for a long time because people were essentially betting on the rapid adoption of the Internet rather than the business model of a specific company. Now, there is only a slight shift in that — now the bet seems to be on the deepening penetration of the Internet and the belief that e-commerce is closer to the inflection point (that critical point after which economics turns in their favour).
Enterprising PEOPLE!!! ----> Amit Mittal...coool article
T ill the year 2000, Amit Mittal was the regular middle-class guy you’d meet on the roads. He was safely ensconced at state-owned gasoline retailer Hindustan Petroleum. He had a comfortable job as a civil engineer, setting up projects all over the country. And to top it all, as a signal of his status as a high-performer, the company had allowed him a perk reserved only for its top officers: He was entitled to fly on official duty. Yet, one fine day, the 34-year-old Mittal did something that shocked his family: He put in his papers, without another job in hand. His father, a professor at a local college, was aghast. His mother was in tears. “There was a huge emotional drama playing all around me,” says Mittal.
The immediate provocation: His bosses at Hindustan Petroleum wanted him to move to a new assignment in Visakhapatnam in Andhra Pradesh. He had already gone through 15 transfers in 10 years. And he simply wasn’t ready to leave the Capital, just when the idea of starting his own enterprise had begun swirling in his head. After a few months in the wilderness, he finally chose an assignment at Sapient to set up operations in the country. But as Mittal scurried between different government offices to get the necessary permissions to start up Sapient’s business, his resolve increased. “I thought, if I could do it for someone else, I should be able to do it for myself too,” he says.
That’s when Mittal set up A2Z, initially as a facility management company. His team of men, whose salaries were his only liability, would do housekeeping and manage facilities for clients, especially the electric part including power usage, maintenance of air ducts and meters. The quest to seek larger clients in this business led them to mobile telephony companies, who needed assistance in managing their large network of towers. All this while, A2Z acted only like a labour contractor, taking on sub-contracting work from a clutch of larger firms.
Of course, the social stigma associated with low-end work didn’t go away. Every time he would meet acquaintances in firms like Fidelity and KPMG to pitch for business, they would give him unsolicited advice. As an engineer, why did he choose such an unglamorous business of housekeeping services?
Fortunately, Mittal wasn’t swayed by their advice. Today, he’s built a Rs. 1,200 crore enterprise. He has Big Bull Rakesh Jhunjhunwala on board as a strategic investor. The marquee investor, who has a knack of spotting promising startups early, bought a 22 percent stake for Rs. 30 crore four years ago, when A2Z had a mere Rs. 50 crore in turnover. That stake is now worth hundreds of crores. Merchant bankers peg A2Z’s enterprise value at about Rs. 4,000 crore. And Mittal and his family hold more than 50 percent in the firm.
In many ways, Mittal’s breakthrough is a clear signal of the emerging opportunities on the fringes of the huge infrastructure build up taking place all over the country. In October, Chennai-based VA Tech Wabag, a sewage treatment company, listed in the bourses and is valued at Rs. 1,750 crore. Hyderabad-based Ramky Infrastructure, which also does waste management among infrastructure projects, has a valuation of Rs. 2,150 crore. “These are the smaller stories of the infrastructure play, especially in areas where you don’t need a lot of capital,” says S. Venkatraghavan, director, IDFC, one of the lead managers to the initial public offering of A2Z.
Mittal is already relishing his new avatar as a serial entrepreneur. He sees a big future in generating power from agricultural waste across the country. He’s also planning how to create a new, private distribution network across India’s numerous cities and towns. There’s yet another plan to replicate a successful waste management model in Kanpur to other large cities like Mumbai.
All these ideas are, of course, far removed from the original facility management business he started with.
The immediate provocation: His bosses at Hindustan Petroleum wanted him to move to a new assignment in Visakhapatnam in Andhra Pradesh. He had already gone through 15 transfers in 10 years. And he simply wasn’t ready to leave the Capital, just when the idea of starting his own enterprise had begun swirling in his head. After a few months in the wilderness, he finally chose an assignment at Sapient to set up operations in the country. But as Mittal scurried between different government offices to get the necessary permissions to start up Sapient’s business, his resolve increased. “I thought, if I could do it for someone else, I should be able to do it for myself too,” he says.
That’s when Mittal set up A2Z, initially as a facility management company. His team of men, whose salaries were his only liability, would do housekeeping and manage facilities for clients, especially the electric part including power usage, maintenance of air ducts and meters. The quest to seek larger clients in this business led them to mobile telephony companies, who needed assistance in managing their large network of towers. All this while, A2Z acted only like a labour contractor, taking on sub-contracting work from a clutch of larger firms.
Of course, the social stigma associated with low-end work didn’t go away. Every time he would meet acquaintances in firms like Fidelity and KPMG to pitch for business, they would give him unsolicited advice. As an engineer, why did he choose such an unglamorous business of housekeeping services?
Fortunately, Mittal wasn’t swayed by their advice. Today, he’s built a Rs. 1,200 crore enterprise. He has Big Bull Rakesh Jhunjhunwala on board as a strategic investor. The marquee investor, who has a knack of spotting promising startups early, bought a 22 percent stake for Rs. 30 crore four years ago, when A2Z had a mere Rs. 50 crore in turnover. That stake is now worth hundreds of crores. Merchant bankers peg A2Z’s enterprise value at about Rs. 4,000 crore. And Mittal and his family hold more than 50 percent in the firm.
In many ways, Mittal’s breakthrough is a clear signal of the emerging opportunities on the fringes of the huge infrastructure build up taking place all over the country. In October, Chennai-based VA Tech Wabag, a sewage treatment company, listed in the bourses and is valued at Rs. 1,750 crore. Hyderabad-based Ramky Infrastructure, which also does waste management among infrastructure projects, has a valuation of Rs. 2,150 crore. “These are the smaller stories of the infrastructure play, especially in areas where you don’t need a lot of capital,” says S. Venkatraghavan, director, IDFC, one of the lead managers to the initial public offering of A2Z.
Mittal is already relishing his new avatar as a serial entrepreneur. He sees a big future in generating power from agricultural waste across the country. He’s also planning how to create a new, private distribution network across India’s numerous cities and towns. There’s yet another plan to replicate a successful waste management model in Kanpur to other large cities like Mumbai.
All these ideas are, of course, far removed from the original facility management business he started with.
Mobile apps---thats KOOOL!!!
T here is a fly in the Indian telecom “minutes factory” ointment. Operators used to churn out voice minutes at lower cost and prices, and consumers used to keep buying more of them. Not anymore. Indians seem to have lost interest in talking. The time each one spends every month on voice calls has dropped from 505 minutes in June 2008 to 401 minutes in June 2010.
Funnily, the same customers are spending more time on their mobile phones. But voice calls, says Informate, a telecom research company, form just 9 percent of the 271 minutes spent by an average Indian mobile user on his phone every day.
Much of the remaining time is spent browsing the internet, on social networks, listening to music or playing addictive games. Third party mobile applications, or “apps” as they’re known more popularly, are increasingly the preferred way to do most of these things. According to research firm Gartner 4.5 billion apps will be downloaded around the world in 2010, adding up to a revenue of $6.7 billion. Gartner, adds that by 2013 that revenue might shoot up to nearly $30 billion.
Major Indian operators like Airtel, Vodafone, Reliance and Aircel have launched their own app stores to take a slice of the still nascent app market. They figure positioning themselves between their subscribers and independent app developers will allow them to demand anywhere from two-thirds to three-fourths of app prices.
They may have a surprise coming.
A Bumpy Road
Most operators have opened up their own branded app stores, powered behind the scenes with white-label technology platforms from cross-platform solution providers like Cellmania, Getjar, Arvato or Infosys.
But unlike voice or SMS where they had a natural monopoly over subscribers, the competition is going to be much fiercer in the apps world.
“There are four critical elements that determine app store success — tight integration with handsets for better user experience and app discovery; the ability to do full-price and micro-transaction billing; a revenue share that is favourable for developers; and a very wide ecosystem for newer and fresher content by the day,” says Vishal Gondal, the founder and CEO of Indiagames, India’s largest game developer. “The operators have only taken parts of the app store model that suited them while ignoring the others. That’s not the right way.”
With the exception of easy billing, Indian operator app stores are handicapped in all the other areas. Apple’s iPhone app store has over 280,000 apps because it’s designed to run on just a handful of iPhone, iPod and iPad models. This allows app developers to fully harness the specific features of each model — screen sizes, processor speeds, data transfer rates, camera resolutions — while creating their apps.
In contrast, Airtel’s app store supports 780 phone models; which means app developers end up coding for a common minimum set of phone features, making the app either too slow for people with cheaper phones or too boring for those with more expensive ones.
Building and nurturing content ecosystems is another area where operators have never succeeded around the world. Infosys is trying to plug that gap by offering a combination of a new product, Flypp, and its services to become the “ecosystem manager” for mobile operators. Infosys’ expertise, says Deepak Swamy, a senior Infosys executive attached to this new product division, will lie in “helping bridge the digital divide” between developers writing apps for over 4,000 phone models and operators targeting consumers with different profiles and needs.
That expertise will come at a cost. Swamy says Infosys will charge both operators as well as developers for playing the part of an ecosystem manager, though he refused to specify exactly how much. Instead, Swamy says developers will get between 20-40 percent of every rupee their app earns, the rest being shared between the operator and Infosys.
But many developers aren’t happy at what they consider dismal revenue shares. Even international app stores for iPhone, Android and BlackBerry that return 70 percent of app revenue to developers are being criticised for keeping too high a share relative to the value they add. PayPal is offering app developers 94 percent of any app revenue they process through its micropayments service.
In India developers are lucky if they get 20-30 percent of their app revenue.
Rajesh Reddy, CEO of July Systems, a Bangalore-based mobile publishing solutions company says it’s not just developers who don’t trust operator offerings but consumers too.
“In the first generation Indian VAS model consumers were opted-in to subscription plans without their consent and often left without easy ways to unsubscribe themselves. If that approach creeps into the app store model then it will destroy consumer trust, leading to a rapid decrease in consumer adoption and ultimately the death of the app store,” he says.
Monkeys for Peanuts
Developers were the lowest rung in the erstwhile mobile VAS value chain, with smaller ones often getting just 10-25 percent of the additional revenue an operator earned because of their applications. The few that managed to earn some money would often get it three months down the line after multiple follow ups. Many operators would then deduct another 10-20 percent of developer dues under the head “billing leakages”, meaning customers who downloaded the apps but for some reason didn’t pay the operator.
Funnily, the same customers are spending more time on their mobile phones. But voice calls, says Informate, a telecom research company, form just 9 percent of the 271 minutes spent by an average Indian mobile user on his phone every day.
Much of the remaining time is spent browsing the internet, on social networks, listening to music or playing addictive games. Third party mobile applications, or “apps” as they’re known more popularly, are increasingly the preferred way to do most of these things. According to research firm Gartner 4.5 billion apps will be downloaded around the world in 2010, adding up to a revenue of $6.7 billion. Gartner, adds that by 2013 that revenue might shoot up to nearly $30 billion.
Major Indian operators like Airtel, Vodafone, Reliance and Aircel have launched their own app stores to take a slice of the still nascent app market. They figure positioning themselves between their subscribers and independent app developers will allow them to demand anywhere from two-thirds to three-fourths of app prices.
They may have a surprise coming.
A Bumpy Road
Most operators have opened up their own branded app stores, powered behind the scenes with white-label technology platforms from cross-platform solution providers like Cellmania, Getjar, Arvato or Infosys.
But unlike voice or SMS where they had a natural monopoly over subscribers, the competition is going to be much fiercer in the apps world.
“There are four critical elements that determine app store success — tight integration with handsets for better user experience and app discovery; the ability to do full-price and micro-transaction billing; a revenue share that is favourable for developers; and a very wide ecosystem for newer and fresher content by the day,” says Vishal Gondal, the founder and CEO of Indiagames, India’s largest game developer. “The operators have only taken parts of the app store model that suited them while ignoring the others. That’s not the right way.”
With the exception of easy billing, Indian operator app stores are handicapped in all the other areas. Apple’s iPhone app store has over 280,000 apps because it’s designed to run on just a handful of iPhone, iPod and iPad models. This allows app developers to fully harness the specific features of each model — screen sizes, processor speeds, data transfer rates, camera resolutions — while creating their apps.
In contrast, Airtel’s app store supports 780 phone models; which means app developers end up coding for a common minimum set of phone features, making the app either too slow for people with cheaper phones or too boring for those with more expensive ones.
Building and nurturing content ecosystems is another area where operators have never succeeded around the world. Infosys is trying to plug that gap by offering a combination of a new product, Flypp, and its services to become the “ecosystem manager” for mobile operators. Infosys’ expertise, says Deepak Swamy, a senior Infosys executive attached to this new product division, will lie in “helping bridge the digital divide” between developers writing apps for over 4,000 phone models and operators targeting consumers with different profiles and needs.
That expertise will come at a cost. Swamy says Infosys will charge both operators as well as developers for playing the part of an ecosystem manager, though he refused to specify exactly how much. Instead, Swamy says developers will get between 20-40 percent of every rupee their app earns, the rest being shared between the operator and Infosys.
But many developers aren’t happy at what they consider dismal revenue shares. Even international app stores for iPhone, Android and BlackBerry that return 70 percent of app revenue to developers are being criticised for keeping too high a share relative to the value they add. PayPal is offering app developers 94 percent of any app revenue they process through its micropayments service.
In India developers are lucky if they get 20-30 percent of their app revenue.
Rajesh Reddy, CEO of July Systems, a Bangalore-based mobile publishing solutions company says it’s not just developers who don’t trust operator offerings but consumers too.
“In the first generation Indian VAS model consumers were opted-in to subscription plans without their consent and often left without easy ways to unsubscribe themselves. If that approach creeps into the app store model then it will destroy consumer trust, leading to a rapid decrease in consumer adoption and ultimately the death of the app store,” he says.
Monkeys for Peanuts
Developers were the lowest rung in the erstwhile mobile VAS value chain, with smaller ones often getting just 10-25 percent of the additional revenue an operator earned because of their applications. The few that managed to earn some money would often get it three months down the line after multiple follow ups. Many operators would then deduct another 10-20 percent of developer dues under the head “billing leakages”, meaning customers who downloaded the apps but for some reason didn’t pay the operator.
Tuesday, August 3, 2010
Essentials of a start-up
There are 10 essential things you need to know about running a successful business. Use it as a checklist to make sure your thinking and your business plan
are on the right track, or if you need to get more information, strategic education or clarity for yourself on your overall vision, your market, or your product or service.
---> Offer what people want to buy, not just what you want to sell. Too often, people jump into a business built around a product or service they think will be successful, rather than one that is already proven to have a market.
---> Get cash flowing ASAP. Cash flow is the lifeblood of business, and is absolutely essential to feed bottom-line profits. So you need to find ways to jump start cash flow immediately.
How do you do that? In a professional services business, you can ask for deposits on work up-front, with balances due on delivery.
You can do the same in retail, especially on high-ticket or specialty item and position it as an added value and a way to insure delivery by a specific date.
You can also add value to generic items by creating private labels, and develop continuity programs where customers pay an up-front monthly fee to insure delivery or availability of items they will buy on a repeat basis. Of course, the key is to make sure there is little or no gap between when you pay for labor, stock inventory and when you actually get paid. Ideally, you'll find ways to get money up front, and your cash gap will never be an issue.
---> Always find new ways to keep costs low. All the cash flow in the world is worthless if it's not positive cash flow, which means you have to bring in more cash than you pay out.
To do this, you need to keep your costs and expenses low. We've touched on this before, especially in terms of outfitting a startup. The main idea is to never pay retail, and look for used or gently used items to furnish your office or your retail space.
Paying vendors up front also gives you leverage for negotiating better prices. Especially in this economic environment, where credit is at a premium, vendors are more willing than ever to find creative ways to finance transactions, and that is a trend will likely continue over time.
So do some extra work and research now to discover how owners and vendors are finding ways to work out deals, and you just may hit on whole new ways of doing business.
---> When planning, always overestimate expenses and underestimate revenues. I was trained as an accountant, so the numbers side of business is part of my entrepreneurial DNA, and was also a big part of my early business education.
That said, I've never seen a startup business where expenses were at least 30 percent more than initially planned or anticipated, and revenues are at least that much less.
Being conservative in your numbers doesn't mean you are willing to accept those numbers, it just means you are arming yourself with information you can work with and work over. It means you can gauge the kinds of efforts and activities you will need to put into sales and marketing.
---> Focus on sales and marketing manically. In business, nothing happens until a sale is made. From the jump, you'll need to find a good way to get leads, convert leads into sales, and make sure you keep getting repeat sales from your customers.
The way to do this is to find or create a marketing and sales funnel system that you can work, test, measure; one that anyone in your company can utilize.
Too many entrepreneurs focus on getting their brand right before they start to generate leads. That is exactly the wrong way to go about business. Leads are always more important than your brand, so don't waste money getting your brand right at the expense of spending that same money to buy new customers.
Soon, you'll discover you can build your brand from the ground up, versus spending years and hundred of thousands of dollars building it from the top down. Don't presume you'll even survive that long, because without leads, you won't!
---> Find ways to exponentially increase profits. In business, there are five drivers that impact profits. If you can master them while keeping your costs in check, you will run a successful business.
It's as simple as getting more leads, converting more leads into customers, increasing the number of times those customers buy from you, increasing the average price point of your sales and increasing your profit margins.
---> Test and measure everything. You can't change what you don't measure, and you can't tell if a program or strategy is working if you are not faithfully testing, measuring and tracking your results.
Another way to look at this is to think in terms of doctors. Most like to get baseline stats of your heart rate, blood pressure and breathing before they delve into identifying symptoms or recommending corrective courses of action.
---> Accept that learning more equals earning more. If you've never run a million dollar business, you don't know how to run one--simple as that.
But you can learn to run one, even if it is your million dollar business you are building from the ground up.
However, you need to accept right now that learning always comes before "earning" (except in the dictionary). You'll need to be committed to learning as much as you can about sales and marketing and operations if you want to have a truly success business.
Once you do that, however, the sky is the limit. Knowing and applying those simple fundamentals in a highly leveraged way is one of the reasons many top executives and entrepreneurs earn so much.
---> Don't discount, add value. Whenever you discount, you are taking money directly out of your pocket and directly from your bottom-line profit. So don't do it. Instead, create added value propositions all the way up and down your product or service line.
Whatever the industry is, look to hold your price points, increase your margins with the low-cost or no-cost extras and any kind of freemium offerings.
In the end, those little things won't cost you a lot, but will build up tremendous goodwill and word-of-mouth with your customers and customer base.
---> Get a coach. Even if you don't get a business coach at first to help you and guide you in your planning and operation, get someone who is objective and outside of your business you can rely on for nitty gritty business advice and to hold you accountable to getting results.
Too often, we think we have all the answers and are the only people who can really get things done. The reality is that another set of eyes can work wonders for how you operate both on and in your business. An outsider can also make sure you are getting the numbers you need both on the top line and the bottom line to survive.
Hope that was helpful and encouraging...however in an entrepreneurs life everything varies there is no fixed "MANTRA" :-)
Please feel free to comment on the post!!!
There are 10 essential things you need to know about running a successful business. Use it as a checklist to make sure your thinking and your business plan
are on the right track, or if you need to get more information, strategic education or clarity for yourself on your overall vision, your market, or your product or service.
---> Offer what people want to buy, not just what you want to sell. Too often, people jump into a business built around a product or service they think will be successful, rather than one that is already proven to have a market.
---> Get cash flowing ASAP. Cash flow is the lifeblood of business, and is absolutely essential to feed bottom-line profits. So you need to find ways to jump start cash flow immediately.
How do you do that? In a professional services business, you can ask for deposits on work up-front, with balances due on delivery.
You can do the same in retail, especially on high-ticket or specialty item and position it as an added value and a way to insure delivery by a specific date.
You can also add value to generic items by creating private labels, and develop continuity programs where customers pay an up-front monthly fee to insure delivery or availability of items they will buy on a repeat basis. Of course, the key is to make sure there is little or no gap between when you pay for labor, stock inventory and when you actually get paid. Ideally, you'll find ways to get money up front, and your cash gap will never be an issue.
---> Always find new ways to keep costs low. All the cash flow in the world is worthless if it's not positive cash flow, which means you have to bring in more cash than you pay out.
To do this, you need to keep your costs and expenses low. We've touched on this before, especially in terms of outfitting a startup. The main idea is to never pay retail, and look for used or gently used items to furnish your office or your retail space.
Paying vendors up front also gives you leverage for negotiating better prices. Especially in this economic environment, where credit is at a premium, vendors are more willing than ever to find creative ways to finance transactions, and that is a trend will likely continue over time.
So do some extra work and research now to discover how owners and vendors are finding ways to work out deals, and you just may hit on whole new ways of doing business.
---> When planning, always overestimate expenses and underestimate revenues. I was trained as an accountant, so the numbers side of business is part of my entrepreneurial DNA, and was also a big part of my early business education.
That said, I've never seen a startup business where expenses were at least 30 percent more than initially planned or anticipated, and revenues are at least that much less.
Being conservative in your numbers doesn't mean you are willing to accept those numbers, it just means you are arming yourself with information you can work with and work over. It means you can gauge the kinds of efforts and activities you will need to put into sales and marketing.
---> Focus on sales and marketing manically. In business, nothing happens until a sale is made. From the jump, you'll need to find a good way to get leads, convert leads into sales, and make sure you keep getting repeat sales from your customers.
The way to do this is to find or create a marketing and sales funnel system that you can work, test, measure; one that anyone in your company can utilize.
Too many entrepreneurs focus on getting their brand right before they start to generate leads. That is exactly the wrong way to go about business. Leads are always more important than your brand, so don't waste money getting your brand right at the expense of spending that same money to buy new customers.
Soon, you'll discover you can build your brand from the ground up, versus spending years and hundred of thousands of dollars building it from the top down. Don't presume you'll even survive that long, because without leads, you won't!
---> Find ways to exponentially increase profits. In business, there are five drivers that impact profits. If you can master them while keeping your costs in check, you will run a successful business.
It's as simple as getting more leads, converting more leads into customers, increasing the number of times those customers buy from you, increasing the average price point of your sales and increasing your profit margins.
---> Test and measure everything. You can't change what you don't measure, and you can't tell if a program or strategy is working if you are not faithfully testing, measuring and tracking your results.
Another way to look at this is to think in terms of doctors. Most like to get baseline stats of your heart rate, blood pressure and breathing before they delve into identifying symptoms or recommending corrective courses of action.
---> Accept that learning more equals earning more. If you've never run a million dollar business, you don't know how to run one--simple as that.
But you can learn to run one, even if it is your million dollar business you are building from the ground up.
However, you need to accept right now that learning always comes before "earning" (except in the dictionary). You'll need to be committed to learning as much as you can about sales and marketing and operations if you want to have a truly success business.
Once you do that, however, the sky is the limit. Knowing and applying those simple fundamentals in a highly leveraged way is one of the reasons many top executives and entrepreneurs earn so much.
---> Don't discount, add value. Whenever you discount, you are taking money directly out of your pocket and directly from your bottom-line profit. So don't do it. Instead, create added value propositions all the way up and down your product or service line.
Whatever the industry is, look to hold your price points, increase your margins with the low-cost or no-cost extras and any kind of freemium offerings.
In the end, those little things won't cost you a lot, but will build up tremendous goodwill and word-of-mouth with your customers and customer base.
---> Get a coach. Even if you don't get a business coach at first to help you and guide you in your planning and operation, get someone who is objective and outside of your business you can rely on for nitty gritty business advice and to hold you accountable to getting results.
Too often, we think we have all the answers and are the only people who can really get things done. The reality is that another set of eyes can work wonders for how you operate both on and in your business. An outsider can also make sure you are getting the numbers you need both on the top line and the bottom line to survive.
Hope that was helpful and encouraging...however in an entrepreneurs life everything varies there is no fixed "MANTRA" :-)
Please feel free to comment on the post!!!
Monday, August 2, 2010
starting up basics!!!!
well there could be more than what I think in starting up a business, but the following are just basic points, any more inputs from successful entrepreneurs are always welcomed to make this post more valuable ...:-)
How to start a business
Idea
Evaluation of idea, market
type of skills needed, labour,
Capital – money-investment
Idea – To start any business the most imp aspect is the idea which acts as a seed of the business-money tree. But the most imp question is how to get an idea or rather many are faced with a dilemma from where to get an idea? Answer is simple, observe your surroundings, analyse your passion and imagine the activity which you love doing the most. For eg. you have a zeel for food preparation and like to explore varieties of cuisines, a chef or a restaurant business might attract you. You can get a clue from your hobbies as hobbies are the activities which we like to do the most in our free time(not the hobbies which we usually mention on our RESUMES of which we rarely know anything… )
Evaluating your idea
Once you have realized what you enjoy to do the most and decided to call the shots on something, its time to evaluate your idea from different angles. Further, one need to know how much feasible that idea is for you, the type of investment needed, what is required to turn the idea into a real profitable business. But the niche is the feasibility of the idea….eg. if you have a passion for real estate but have no time to get information on local/international land prices or don’t have money to invest in the stock market than it would not serve the purpose… But if you have a passion for food or making sandwiches and plan to open a small sandwich shop than you can evaluate the idea by considering many factors like land, locality, are there any other sandwich outlets in your area, do you have the time to invest in the business, minimum capital required etc..
Skills
After making the necessary evaluation you need to know the skill which would be required to run the business, eg. If you are planning to open a food outlet but you are not a good cook than you need to know who can cook for you, i.e labour required , cost involved in it etc. Generally one should start a business where he/she has a hands on expertise so as to understand the business from the roots instead of relying on other human resource.
Capital- “its all about money honey”
Last the most important aspect of your venture is money , you need to know if any capital or money is required to start up the business eg. Machinery, marketing costs, labour capital etc.. It is very important to find a way on how you will get the money, there are different ways to pour the capital you need through banks, VCs, partnerships etc..the list goes on .
The above points are not exhaustive but they can be the pillars of your venture and would prove to be the most important aspect in deciding your venture vision..anything else if you feel can always be posted here… cheers!!
How to start a business
Idea
Evaluation of idea, market
type of skills needed, labour,
Capital – money-investment
Idea – To start any business the most imp aspect is the idea which acts as a seed of the business-money tree. But the most imp question is how to get an idea or rather many are faced with a dilemma from where to get an idea? Answer is simple, observe your surroundings, analyse your passion and imagine the activity which you love doing the most. For eg. you have a zeel for food preparation and like to explore varieties of cuisines, a chef or a restaurant business might attract you. You can get a clue from your hobbies as hobbies are the activities which we like to do the most in our free time(not the hobbies which we usually mention on our RESUMES of which we rarely know anything… )
Evaluating your idea
Once you have realized what you enjoy to do the most and decided to call the shots on something, its time to evaluate your idea from different angles. Further, one need to know how much feasible that idea is for you, the type of investment needed, what is required to turn the idea into a real profitable business. But the niche is the feasibility of the idea….eg. if you have a passion for real estate but have no time to get information on local/international land prices or don’t have money to invest in the stock market than it would not serve the purpose… But if you have a passion for food or making sandwiches and plan to open a small sandwich shop than you can evaluate the idea by considering many factors like land, locality, are there any other sandwich outlets in your area, do you have the time to invest in the business, minimum capital required etc..
Skills
After making the necessary evaluation you need to know the skill which would be required to run the business, eg. If you are planning to open a food outlet but you are not a good cook than you need to know who can cook for you, i.e labour required , cost involved in it etc. Generally one should start a business where he/she has a hands on expertise so as to understand the business from the roots instead of relying on other human resource.
Capital- “its all about money honey”
Last the most important aspect of your venture is money , you need to know if any capital or money is required to start up the business eg. Machinery, marketing costs, labour capital etc.. It is very important to find a way on how you will get the money, there are different ways to pour the capital you need through banks, VCs, partnerships etc..the list goes on .
The above points are not exhaustive but they can be the pillars of your venture and would prove to be the most important aspect in deciding your venture vision..anything else if you feel can always be posted here… cheers!!
Sunday, August 1, 2010
common mistakes by business owners and ceos
It is often a dilemma for business owners and ceos to determine how to get ahead of the competition and when is the right time. According to me instead of going in depth of the so called ‘business management principles” and using really hard “jargons” as usually mentioned by today’s manager theys should focus only on the basics.
I term these basics as I and Money which can be inferred or interpreted in different ways. The first way is I and Money which means how am I earning Money , from the customer’s perspective it means how am I spending Money. The “I” has various interesting words if we look at it more creatively. I have coined, rather just found three words from the very “I” which are :
Impact, Innovation and Information.
If we talk about Impact its just very simple to imagine or visualize with the word itself, the most important thing for business owners to know is that how is their product “impacting” the real consumer or rather the customers? How it is impacting their lives and if you are a little more creative you can visualize by comparing it with various industry practices.
Innovation – We often forget to ask ourselves how much Innovative we have been in our line of business ever since we started or ever since we started to lose money. The answer signifies its value to you .
Information – Information age as we often call today to the world, what are we doing to get the information and what steps are we taking to stay updated.
Money – last a very important factor in business or in a relationship is m oney, what are we doing with it , how are we channelising our energies to synchronise with the money around us.
aBOUT me
hiya all, the main purpose of the blog is to make the blog a real platform which would act as a place for tech passionate youth of the country to participate and share ideas, develop ideas and ultimately turn into a successful entity....cheers!
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