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Loading ...He is a Mint columnist and I have not read all his columns as I have been rather busy but I remember reading one in August which I found amusing and instructive.
Here is the link
I hope to read more of Mr. Varma’s writing. In the US I was a regular reader of Walter Mossberg’s colum in WSJ on personal technology.
(4 votes, average: 2.25 out of 5) Loading ...Attracting talent is enormously important.
I saw some earlier threads on this so I thought I would share how we are trying to do this at Eko. We created a pool of stock that advisory board members and early employees can invest in. This stock is issued at approximately 3X the founders round. The 3X number was debated and we felt it was fair. Principal founders can buyback in case a person leaves . Buyback rights lapse with time.
Tax wise this works out better but upfront investment is required.
In our case a COO or CTO could invest to own as much as 3% of the company. As far as we know this is very generous but we feel it would be worth it if we got exceptional talent. The stake would get diluted as we raise more capital but at 50% dilution it still means over $10MM for each of them if we can get a billion $ exit. For smaller exits the math is obvious. In addition to this we felt we needed to pay 24 lacs per annum as the kind of people that we are looking for would probably command packages of Rs 50lacs to 1 crore per annum. We have retained Reffster a headhunting and referral startup to find and screen candidates for us.
For other positions we have similar combinations of cash + restricted stock at lower levels. Advisory board members get only restricted stock.
This has worked well for us. We have got early employees to join us and we now have two advisory board members.
In startups you want to use your limited seed capital to produce tangible things that VC’s /angels can look at, get impressed and invest. ( This assumes you want VC/angel investment)
These could be prototypes, beta customers, key business development deals or letters of intent.
At Eko we have just signed a letter of intent with a large bank for our pilot. This is likely to make it much easier for us to move forward on many fronts.
People recognize that it is not easy to get an LOI signed by a large company which is why if you can get that done it gives a lot of people including the startup team a lot of confidence to climb the mountains that lie ahead.
At Eko we managed to do this in a month after formal incorporation. If we can do it and LOI’s are relevant in your startup then so can you.
This is an extract from a post on another blog. Click here for the full post. In some ways I am trying to be a farmer sharing his seed corn when I write about trust or Eko. The major difference is that Eko is just starting and has won no awards but the intent to share and see others prosper as well is strong.
In his book Games Indians Play: Why We Are the Way We Are, V. Raghunathan writes about a farmer whose corn won top awards year after year. When a reporter asked about the secret of his success, the farmer attributed it to the fact that he shared his corn with his neighbors. Why, the reporter wondered, would the farmer want to share his seed when those neighbors also competed with him for the prize? The farmer’s reply was, “The wind picks up pollen from the ripening corn and swirls it from field to field. If my neighbors grew inferior corn, cross-pollination would steadily degrade the quality of my corn. If I am to grow good corn, I must help my neighbors do the same.”
That Indians often fail to act like this farmer is the principal theme of Raghunathan’s book. Using examples as varied as their tendency to drive through red lights to their failure to protect the environment, Raghunathan argues that Indians often act in ways that focus on winning immediate gains at the expense of long-term benefits. What makes Raghunathan’s approach unusual is that his argument isn’t a moral diatribe: He employs game theory — a branch of mathematics — and related concepts, such as the prisoner’s dilemma, to present his case.
We have recognized the importance of creating a ” Circle of Trust” at Eko.
It is quite possible that trust may be an important element in the business of some other startups and they may get inspired by our thinking. With that in mind we have made the first version of our document available for free download ( no registration required) from our website.
We believe that the “Circle of Trust” will be an important part of our model though some of the external people we have shown it to are skeptical. We are also not sure whether the document is well presented and easy to understand.
For those of you who are interested please download, read and let us know what you think?
I have no desire to offend anyone with this post but it is about time the confident India ( post T20) thinks positively and stops petty thinking.
My aim in posting once in a while on Eko or on other things is to get a few people to think positive and big and to share experiences both good and bad. One can learn from success or failure.
I do not need this forum to get publicity for Eko. Eko is not a web traffic type play and at this stage we have all the attention we need. I have turned down a few requests from media to write about Eko because we are at a very early stage.
If I write about founder chemistry it is because I find it delightfully refreshing at Eko and I am not trying to signal anything except reminding myself and others at similar stages on the importance of positive vibes.
At Eko we are quite excited about a “Circle of Trust” document that we are working on. Our inspiration for this was an integrity document that Mindtree has on its website ( available for download).
I will let you know when we have our document completed and available for download. Just as Mindtree inspired us maybe we can inspire someone else.
Things are buzzing at Eko and we have just updated our website to let people know a little more of what we are upto.
In a startup working on the right things and keeping founder chemistry strong are important challenges. We think we are doing well on this score.
We have agreed on three key goal areas for this financial year. These are # of active customers that we want to exceed, an upper limit on the money we are prepared to burn without venture funding and a fundraising goal.
This helps us keep focused.
Your comments are most welcome.
We have taken the first baby step in what we hope will be a long journey to build a global world class company in India . ( Kind of like Don Quioxte tilting at windmills)
We are still in stealth mode . On our website you can find details of our team and vision.
We see service providers and members as customers and one of the main planks of our thinking is “Delighting Customers”
It has been long since I posted on VW. I had a good trip to USA and the level of activity on both the coasts is quite manic. In spite of the subprime woes I doubt that a recession is on the horizon anytime soon.
On a personal note it looks like that I will be getting together with three young entrepreneurs in Delhi and founding a company soon. Expect to hear a bit more over the next month.
Unfortunately for the rest of 2007 it will leave me no bandwidth to advise entrepreneurial companies. With those who have already established contact and would benefit from a brief interaction I will try and do that but will not have time for any new interactions. I will also till August 2008 not invest in any startups other than the one I found.
Initially startups , I believe, require intense focus with few distractions.
I will continue to read VW with great interest but the frequency of my posts/comments will be quite low ( I can see some people heaving a huge sigh of relief )
For our startup to succeed we will need a lot of support and we look forward to getting that from the VW community.
This is my last post on VW till I return from my US trip in July .
We are approaching tax season in India. For a number of years in the US I have used the Quicken family of products including Turbo Tax. There are other interesting personal finance sites like Bank Rate, Lending Tree, Value Line, Motley Fool etc. to name a few. I am interested in getting involved in a play along the following lines in India.
What is the play?
A destination site to help individuals invest in various asset classes in India. Individuals could be resident in India or overseas.
Can critical mass be achieved?
Yes it should be possible to get over a million users.
Can critical mass be monetized?
Yes getting an average ARPU of Rs 1000 ($25) per year should not be hard.
Lots of people have tried and not got much traction. Why will this play succeed?
Good question which I would like anyone who sends me a pitch to answer. I obviously believe that the play will succeed which is why I am interested.
Can a startup do this? Will it get killed by deep pockets of existing media / financial services players?
Good question which I would like anyone who sends me a pitch to answer. I obviously believe that the play will succeed which is why I am interested.
The Bottom Line
I am looking for entrepreneurs who are passionate and capable of executing this play. If you think you have what it takes I will be delighted to interact with you.
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