Just finished reading this book by John Mullins and Randy Komisar. It outlines the importance of iterating on the business to evolve the plan continuously - in many cases, the initial plan that entrepreneurs start with doesn’t work as it is.
This is something that people in the venture space have known intuitively. John and Randy do a good job of motivating it with examples, and outlining a broad framework of what to watch out for. In some sense, the book is broader than just getting to Plan B - the initial portions on analogs and antilogs (as ways to find patterns that can fit your business) could be an independent topic. The degree of discipline that the book brings to those is limited, in that its a matter of judgment as to which analogs and antilogs one must choose out of many that are available - hindsight (as in case of many examples in the book) make it obvious, but thats not of much use when planning a business. Similarly, many case examples, such as Apple, are really about how a business will need to evolve even after it is successful (diversification, if you will).
The portions of the book I found most interesting are the ones that genuinely outline examples of companies that learnt somthing important along the way that significantly altered their plan along the same line of business. Examples like African Leadership Academy, or Shanda. From an operating discipline standpoint, I wholeheartedly agree with the approach to define dashboards, keep listening to the data, and continuously refine the model. Global Giving seems to be a great example of where this was done systematically. In some of the companies I have been involved with, the same approach has helped us make shifts sooner than would be obvious if the dashboards were not as explicit.
The importance of dashboards and thinking upfront about risks is also interesting because in most cases the Plan B can not be preconceived - there is inherent risk in startups. Many examples in the book illustrate this - Silverglide, Google, Pantaloon, amongst others. Hence the process becomes more important than the content.
Overall a great job. In the middle, the book deviates into a primer on startup financials which could have been skipped here.
I was speaking to a successful entrepreneur and angel investor yesterday about the evolving angel investment climate in India. He voiced a concern that seems to strike a chord - that while many successful entrepreneurs in India are involving themselves in angel funding, and even setting up early stage funds, there is a tendency to “rise above” building companies and a resistance to acting as a peer to budding entrepreneurs. Many successful entrepreneurs seem to graduate over, and consider it below themselves to roll up their sleeves with a rookie. Conference speeches take over garage whiteboarding.
In his view, this is a key gap in Indian angel ecosystem (to the extent it exists) and I agree. Perhaps too much of a class systems amongst entrepreneurs? Whats your view? How can we get the right mentors active in guiding new companies?
Sramana had announced an offer for venturewoods readers to review her first book - Entrepreneur Journeys 1. We have received some of the initial reviews, and I am happy to share those here. People who might have otherwise read the book may please comment here itself.
Thanks to Nasscom for offering additional discount of INR 500 on the registrations for the Product Conclave for Venturewoods users. This means, a startup entrepreneur can attend all the sessions, Expo, networking, entertainment for just *Rs 1500.*
Please quote my name (Alok Mittal) as reference, and also include your reference in the attached Registration Form; send it along with the cheque to Nasscom office address below, or to Nasscom office in your city.
Please email bangalore@nasscom.in (reaches to Bharati) for any clarification. Last date for this offer is 12th October.
Paul Jazefak has an interesting post on VC bashing. I was at the TiECon last week chairing a panel around fundraising, when the ultimate happened - a VC on the panel started bashing VCs! How much worse can it get
I think part of the issue here is a lack of understanding of the VC business - VCs are not angels (as much as angels arent - no pun!) They are in a business. However, in my view, there is a “value system” to each business and each individual. For VCs, my list would include integrity, empathy, access, humility, partnership and fairness. Not just because its good human nature to have these (which is true of many other things I didnt put up here, such as transparency,) but because these are values that IMHO help build a great VC business.
For folks out there who have pitched or tried to pitch to VCs, what have been the biggest frustrations and delights? For people who actually have VCs invested in their companies, what do you appreciate about them and what is it that you’d like them to change?
Update: Someone commented on this article on facebook, saying VCs suck because most of them have no operational experience. Does that really matter? Check out this analysis by pehub - doesnt seem to say so. But then, nice rebuttal here.
WSJ Venture Capital Dispatch has an interesting article on how long it takes to build large (defined there as time to get to $50M revenue) software companies. The answer: 8-9 years on an average if the sample is top 100 public software companies. Thats pretty long, given that the sample is really the top end. Clearly has interesting implications on how well (or not) the venture model of 5-6 years of holding period applies to software companies.
TiECon Delhi is being held on Sep 18th and 19th. The theme this year is “Smart Entrepreneurship in Challenging Times”. The emphasis is on highlighting winning tactics in a market where many businesses have faced uncertainty and slowdown, and external financing has become harder to raise.
Registrations are open - you may register here. Looks like TiE has gotten smarter on the registration packages - looks good value for money!
TheFunded has published what it believes should be a standard termsheet in venture financings. Their argument is that the following balances the rights and incentives of investors and founders well, and the negotiation should be limited to valuation and amount being raised. Interesting point of view.
These are all commendable efforts and in my view, in the right direction. The issue arises when certain provisions are more valuable to one party than other (due to differential view on the business, different degrees of experience etc) - so in some cases, founders may be optimistic to not care about participation, but may want higher valuation. Or, the VCs may perceive certain additional risks and may want protection against those. Such deal-specific characteristics encourage “trade-offs” amongst terms - a la “if I have to offer a higher valuation to be competitive in the deal, let me add more participation”. A negotiation process in the end is about trading off what is less valuable to oneself for something that might be less valuable to others.
Would love to get thoughts from the readers on where they tend to fall on this debate.
I know its all over the web by now, but couldn’t help linking it here - great perspectives on conviction, persuasion, partnerships and organizational transitions.
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Archive for Alok Mittal.
Alok is a first generation entrepreneur, now in the venture capital business. Alok heads up venture operations for Canaan Partners in India, with focus on internet, technology and BPO space. Alok is also a founding member of Indian Angel Network - an organization comprising successful entrepreneurs looking to invest in seed stage businesses. Prior to this, Alok cofounded JobsAhead.com, a leading job portal which was acquired by Monster.com. Alok is an active charter member of TiE Delhi. Alok is a computer science graduate from IIT Delhi and, postgraduate from UC, Berkeley.
The views expressed on this site are personal views of Alok, and do not constitute an offical opinion of any company or organization.
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