From REALLY early stage, I mean a bunch of guys 3 or 4 years out of college, having quit their highly paying techie jobs, wanting to build the next big thing and get rich soon. I can really relate to the picture, as an year back, I really did fit the description. You know these people when you meet them. They have hazy ideas in their heads which they think are profound, and are filled with enthusiasm and determination to fight it out and “make it work”.
While someone who is “seasoned” can bludgeon these guys’ theories to death in 10 minutes flat, we can see that traditionally in the west, its guys with these kind of profiles who have gone on to create the biggest tehnological successes. While some amount of bludgeoning is definitely justified, I have a feeling that the “seasoned” lot misses one point while dealing with these start-up guys: Judging by reason, start-ups hardly have a chance of succeeding. Start-ups have disbalanced teams, no money, no background in business, and still, some of them go on to become phenomenal successes.
Then how does one judge a startup? On what parameters? My take is, a start-up should really be judged on three parameters that I have written about below. I’d love to have a discussion about this here, and see if we can add to this list. Here’s my list of parameters (in no particular order):
1. The Market: Start-ups trying to solve a problem that does not exist are so common. There should be a clearly defined market/need/demand for whatever the start-up is trying to do, whether it is a consumer internet portal, or an enterprise service or electronic gadgets. The “seasoned” lot must first look at the existence of the market, and estimate the size of it.
2. The Techonology: Most techies will try to solve problems with extreme use of extreme technology, because thats what they are good at. Now that, in many cases, causes problems. For instance, it might increase costs so much that it might make the product or service prohibitive for the market. Its very critical to correctly judge the technology the start-up is using.
3. Enthusiasm/Guts/Desperation-To-Succeed/Human-Qualities: This is what separates the men from the boys (Sorry, I didn’t intend to be sexist here :). An assessment of this again comes from the gut, and you know these guys when you see them, and have talked to them for just five minutes. This is the magic sauce that makes a start-up succeed. It is very critical to correctly evaluate this.
Other than these, I know that an infinite number of holes can be punched into any start-up’s theories. Is doing that right? I would love to know what you think.
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There is a new trend in premier institutes – start a venture! These half-backed startups are created by seniors or just-passed-out grads who invest in registering a company and getting a domain name and coming up with a website. They rope in similar utterly unmotivated others who actually are not focussed at all on the startup – all to learn a few tricks and impress an interview panel. The minute they get a job or a MS admission the whole thing fizzles out.
IMHO, while the mushrooming number of startups show that there are no true leaders or motivators inside or outside our corporates or in our erstwhile education institues, these kids have found yet another way to try to compete within the system. How do you judge a startup – who are you to judge anyway !
@Nilesh, regarding (2), consider these two examples:
1. A solution to track what path a car has traversed by fitting the steering mechanism and speedometer of a car with a tracking device, which will help track the car’s path to a fair level of accuracy. Can be helpful, you’ll be able to retrace your path at any time, remember the direction to any place you traversed once, etc. etc. etc. A GPS like solution.
Technically exciting. From the business perspective, meaningless.
2. An off-line city search for mobile phones, where you’d have the data for the city on the phone, and won’t need to connect to the server whenever the user searches for anything.
Again, technically exciting. Business-wise, meaningless, with GPRS usage increasing, and sms based solutions being so convenient.
That brings to another point.. why do these “pre-startup” invest so much time in pitching to VCs, Angel Intestors etc. etc.? I think it is because of the following reasons:
1. Having left their jobs, or being on the verge of leaving their jobs, they know their savings are going to run out after a while, and they need to arrange for money.
2. They need validation for their ideas. They want someone “seasoned” to say: “That sounds great!! Go ahead and do it”.
Both are very valid needs. But then seeking money too early is a trap. One should, in the beginning, expend all their energies and money and reach a prototype, in my opinion. Validation, of course, is required.
Hmm.. content for my next post 🙂
IMHO, market is not a parameter. Its why you are going into business – to make money selling something. It is the all absorbing consuming thing. Nothing else can be said in the same breath.
+1 for nilesh point,
What i do personally think startup is judged by,
1. Idea and/or Team
2. How much execution whole team has done
3. Number of users (but at very early stage you may not have much users !)
I know couple of **Pre-startups**, who do have great idea, real problem but No Execution. They are just pitching VCs/Angels ! They have capacity to execute it, but yet not they have not done 1% work (Except Money raising!)
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