Starting Up in a Downturn

Downturn? I have only realized it much later after turning entrepreneur in December 2008. Nothing seems to have changed. March is busy as usual for clients when one rationalizes that business would start flowing in from April! Clients on the other hand are as difficult to make part with money beyond the idea honeymoon as before.

Nothing has changed. Would you agree?

One of the things that has changed perhaps is the time that entrepreneurs have on their hands. True in my case at least, it is a genuine pleasure to write again on VentureWoods after a long time. Many friends are now willing to share war stories, helping a new entrepreneur like me to tread warily on the path trodden well and hard before me by the faithful.

I was speaking with a close friend about how to hire, he is poised to raise a double digit million round for his business – yes, who said capital has dried out. You normally meet one set of people who are entrepreneurial and want to take the risk of working with you and then they want equity. Sadly, you quickly get into a position where you have options alone. In any case, if you are not a co founder does it make sense to join a startup still ready to offer equity? I would say not. A startup who still has equity to offer to a non founder has not got its act together yet. And the single digit equity that is then available is not really commensurate with the value the recruit is bringing in or from his point of view, doesn’t really cover his risk.

Anyway, we were talking about the second set of people who are not entrepreneurial and know exactly what they want, a function in an interesting new venture – consulting, marketing, sales – and we came to the conclusion that such perhaps are the best hires for a new startup who doesn’t have any more equity to hand around.

I am not taking his advice though. In my career over the last 10 years I did well with taking on fresh people out of college, asking them how much they wanted, adding a random premium on it and then combine that with a responsibility beyond their years. My experience – forget equity, ownership – young people treat this as their opportunity of a life time and what they lack in experience, just fast and quick, cover with their sheer hard work and enthusiasm.

Amar Bhide wrote an interesting history of McKinsey. I have read it again and again for just one thing, how a founder can vision what his company is going to look like years from the start and how to put into execution things, and balances that complement and support each other to achieve that vision. Recommended.

Ah yes, I started One Billion Minds – a powerful new prize led innovation platform connecting Corporations and Non Profits to students in top universities worldwide able to solve problems in Design, Engineering, Science, Computer Science, Business and Social Innovation.

It was indeed a lazy Saturday, downturn or not!

2 Responses to “Starting Up in a Downturn”

  1. Sankar says:

    ‘One Billion Minds’ looks really interesting! Will check it out in detail later…

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