Offline Operations – Should you even bother?

As the topic suggests, this is a sequel to my last post. If handling offline operations is such a challenging task, should startups even venture into that problem space? Probably stating the obvious, but the answer depends – depends on the problem you decide to go after, the team you have in place, the size of the team, the resources that you have at your disposal, and last but not the least, a good understanding of where your passion and competencies lie. If your team is predominantly a strong technology group, it does seem easier to go after a pure technology play. Sure, such a pursuit has its own set of challenges but at least they are more likely to be in a relevant domain thereby vastly improving your chances of addressing the problems that crop up.

The vast majority of startups in India though, especially the ones in the Internet space are about solving an existing consumer pain-point, making it easier for customers to do something that they need to do and have less efficient ways of doing today. And typically, solving such a problem does involve handling offline operations – if not, where is the question of solving anything? More often than not, they seem to be ideas that have worked in markets elsewhere and are then adopted/adapted for the desi audience. Nothing wrong with that – getting those same idea implemented successfully in the local market is a pretty big challenge, requires a fair bit of localization of the original idea and therefore worth going after. It is also worth noting that the vast majority of the startups that have gotten funded so far fall in this category – among other reasons for this phenomenon, one factor is certainly the fact that it seems relatively easier to get customer transaction with such a venture. If its a fairly common problem, such as booking airline tickets, there is a significant addressable market size, a problem that customers will identify with and one that will provide instant gratification for the end-user. Obviously, one would need to do a good job of solving the problem to continue to gain marketshare, but at least the opportunity to attempt a solution is relatively easier to get. In short, there is obvious benefit in going after such a problem, but as stated earlier, handling the operations in an effective and efficient fashion has to be an important part of the gameplan for such a startup.

In general, it is good to ask the following questions:

1. What is the problem I am solving?
   Hard problem, simple solution is an ideal principle to keep in mind, I think. In other words, in order for your venture to be compelling, you need to solve a hard problem but in your own interests, the solution needs to be simple. Note that hard problems usually involve manging operations that are non-trivial, but that is where you can add value, by reducing the complexity of those operations. And I am not having fun with words here, but solving hard problems in a simple fashion is definitely not simple, so doing this will take some hard work.
2. What is different about my solution? Why am I better than the competition?
   Yes, you should have competition no matter how cool your idea is, even if that competition happens to be the traditional way of doing things. Make sure you differentiate yourself from that competition and have enough fuel in the tank to continue staying ahead.
3. On a related note, how do I protect my turf?
   If the idea is good and you are able to execute well early on, thats great news…but that will also bring in competition. When folks see your initial success, they will also see an opportunity. While you will have your strenghts, your solution will also have its weaknesses (after all, you are a startup – you cannot possibly do everything), and good competition will see opportunities in those weaknesses. This is unavoidable but you can certainly anticipate this, plan and minimize the impact. The more differentiation you have and the harder the problems you solve, the more secure your moat is going to be. Yes, it is hard work, but you knew that already.
4. How well does my solution/offering scale? Does it become increasingly efficient?
   The answer better be an obvious Yes here. This will take a while to achieve – a few months to even a few years, maybe, but you need to be able to get there. The inflection point at which the scale starts to show big improvements in efficiency can vary, but that inflection point needs to exist and it better be within a reasonable timeframe, if not the ROI is not going to be compelling. I am probably over-generalizing here, but technology is your best friend here. The more you employ technology (smartly, of course), the easier this will get to accomplish. For us, one way to look at it was that the bulk of our initial expenses was in staffing – Customer Service Reps, Delivery Executives etc. And our approach was to try and improve the extent we could get rid of manual processes in our workflow, make existing processes more efficient with technology solutions so as to increase the ratio of volume of business to staff size. Apply your own variables/examples here, but the simple guideline to remember is that your revenues should increase without requiring a proportionate increase in costs.
5. Who is my customer? Will they pay for the solution?
   It is very, very important to identify who your customers are. Sometimes, the answer to this question isn’t as simple as it appears, because you could have multiple customer segments, and your solution typically addresses different pain points for each segment. Understanding those pain points, the extent to which they are a pain, will that customer pay you if you eliminate or reduce that pain are all important questions to answer – and the answers will be critical in helping you determine the scope of your solution. The customer does not have the resources or the motivation, financial or otherwise, to address those issues but your value proposition that you are able to solve those problems at a fraction of the cost. Simply stated, the more obvious the justification for the customer to pay you for your service, the better off you will be.

I came across an article recently that is related to this topic that made for good reading – check it out. Happy reading!

Barcamp Hyderabad on Oct 11, 2008 @ ISB

The next edition of Barcamp Hyderabad is here. There is a visible change in startup activity in Hyderabad over the last couple of months – more informal meetups, more organized events and presentations, some semblance of investor activity and the early signs of a startup community are all great positive signs. For a while now, I have envied my fellow entrepreneurs in Bangalore because there definitely seems to be a better support system (and experience has shown how valuable having that support is for a startup) in place in India’s Silicon Valley, but things are slowly starting to happen in Hyderabad as well. These are early steps no doubt, but they are certainly in the right direction and will be great for the community here. What is needed is your support to help the community grow and thrive, so please attend.

The theme for this Barcamp is also very relevant to most startups here – Technology Entrepreneurship. A lot of folks have already registered, including a few speakers, so if you are interested in startups, entrepreneurship etc, I assure you that this will be worth your time. The Barcamp is on Oct 11th (kicks off at 2:30pm) at the Indian School of Business. One doesn’t need an excuse to visit the beautiful ISB campus – this is a great choice of venue. You can find more information on the event here. Hope to see you there!

Support on the Home front…

While I have often thought about how hard life can be as a startup entrepreneur, I have to admit that I haven’t nearly thought as much about how much harder it has been for my family to support me through all the highs and lows. Quite easily, its a much harder challenge – mainly so because its such a thankless job. They don’t really get to experience all the highs that you enjoy running your own startup, and have to endure all the lows and more. And they didn’t even really sign up for that role by choice – In all likelihood, they just wanted you to do what you wanted to do and therefore went along.

This post is a tribute to Anusha, my wife and the rest of my family. While not all of them agreed with the decision of starting off on my own, they have given me one hundred percent of their support one hundred percent of the time. Life is hard now, but it would have been impossible had they not backed me as strongly. Obviously, Anusha took the bulk of that burden and has patiently travelled on the journey with me, carrying a lot of the baggage during that time. The fact that she still has her job is definitely a relief – the pressure isn’t as intense as it could potentially be when it comes time to pay the bills, god alone knows how much worse that would be. But really, I honestly think that’s the easy part. If you know me, I have my fair share of mood swings and can be a very unpleasant guy to be around, especially at home where I take the liberty with people close to me – and I was that lousy when I had a stable job, career was going well etc. So you can only imagine how much worse it would be now, considering I take all the stress from the startup home and unload it one go. I think she now knows quite well what hell must be like, and still puts up with it, forever a smile on her face. Thank you, dear Anusha, its not without reason that I consider you my best friend for life. Sometimes you have a gift in your possession that you know you don’t deserve but yet you are never going to give that up – you are my special gift.

A friend recently sent me a blog post that also highlighted the importance of family for everyone involved with a startup, including employees. I think it was a great piece, and is very relevant for this post. The author has done much better justice to the subject than I ever can. So, if this topic interests you, read on.

Office Space for your Startup

It has been exactly one month since my last post. And despite my commitment to write at least once a week, I had to make an exception for the last 4 weeks because I was busy getting our new digs ready. Our new office space (the landlord gave us just the building shell – finishing it up was our responsibility) not only took a month to get ready, it also meant that we didn’t have a proper space to work out of for a month. Now thats a killer for any startup, particularly one with an operations group, dealing with live customer transactions on a daily basis. I thought our Operations team did a commendable job of handling our business for the month we were in a temporary space, especially given all the crazy Hyderabadi rains that seemed to find just the right time to show up. Thank you dear customers for bearing with us during this challenging time, you were certainly very patient and understanding.

Now, how we got into such a mess is a topic worthy of a lengthy discussion but I would be digressing…what this really got me thinking about was the key criteria for startup office space, how you decide etc.

Firstly, you obviously want the space to be cheap – that is true for all startups, funded or otherwise. Beyond that, all the other criteria depend on the size, nature and type of startup, so I will just stick to our experience. Ours is a consumer facing startup, and brand visibility is paramount. We are now bang opposite Cyber Towers, one of Hyderabad’s most prominent landmarks and the fact that we can prominently display our name in such prime real estate adds incredible ad value. Lots and lots of eyeballs, and hopefully at least some of those will translate to site visits and so on. The next key aspect for us was phone and broadband availability – network strength, coverage etc. Those two are mission-critical elements for us and if either of them is down, then the business suffers greatly. And unfortunately, despite all the data that indicates otherwise, you still can’t take either of these for granted in Hyderabad, even in an area like Hi-Tec city. Sad, but true! So we have backup options, but that adds to the cost, and that hurts. Then there is availability of power, which is just as critical. If you don’t want to (or can’t afford to yet) burn money on a UPS system, then you better make sure the power supply is pretty reliable. Of course, no one could get away from the nasty power cuts for hours together last month but generally, this seems to be less of an issue on our side of town. And then there is parking – obviously an extremely premium feature, especially if you want to be on any major roadway. If you have more than a few employees that drive their motorbikes and cars to work, then you better pay attention to this and have a solution in place. You could mitigate some of that by picking a terrific, central location – encourage them to ride the bus or the metro. Not only is it cheaper, it is also pro-environment. Central locations typically also come with plenty of eateries, chai addas etc, and your employees will most certainly need those. Finally, do some basic surveys of the locality, the surrounding environment, challenges that other companies in the neighborhood face etc and be sure that those are ones you can handle or live with.

Thats on the outside, which I think is harder in some sense. On the inside, more than anything, you want the place to be clean, functionally well-designed and something your employees will enjoy spending the bulk of their day (and night?) in. If you need to invite a partner or a customer over, you obviously don’t want to be uncomfortable having them over. Space constraints depend on your size/staff but some key things to think about are clean restroom(s), a pantry/lunch room with some basic amenities, sufficient power points, phone/LAN outlets (Wirless is the way to go if you are a true tech outfit, everyone has laptops etc but if you are like us and have older systems for the non-technical staff, then wireless can get expensive), plenty of light (the more the natural light, the less you’ll spend on lights and power) and ventilation – nothing unique about these requirements but one tends to compromise on these in the interests of keeping costs low. You dont want to be Penny wise, pound foolish. Startup needs tend to expand quickly and you’ll want to accomodate those without having to move again, so think a little longer term while still worrying about your budget. And not to be fancy, but try and accomodate a meeting room in your plan if at all possible – as you grow, you’ll need to be on conference calls with partners, customers, investors, internal team etc and a separate room can be a blessing, especially if you don’t have offices/cabins. Make a list of core requirements and nice-to-haves clearly separated out, plan your budget well (and please be realistic – if you are in Hyderabad, simply double your budget and start again) and check out at least a handful of options before deciding. Not only will that give you a pulse on whats out there, it will also help you think about stuff that you hadn’t earlier. Finally, make sure your space is in a commercial building (and not operating in a residential one – such an arrangement is cheaper but also illegal and can quickly get you in trouble).  Visit a few other startups and talk to them to see what traps they fell into.  If you are in Pune, Mukul’s tips at might be helpful.

Incorporating your company

The aspect of incorporating your company is one of the first steps of formalizing your venture. Without completing this step, you won’t be able to conduct any official business, so its pretty vital that you take care of this fairly early on – for instance, even to open a company bank account, the Certificate of Incorporation is a basic document that the bank will ask for. There are a few ways to incorporate your business such as Sole Proprietorship, Partnership or a Public Limited Company. I am no expert on the differences between these but for most startup companies, the most commonly suggested route is the Public Limited Company route. This blog is an excellent write-up on these and other initial phase activities – read bookmark this to your Favorites, you’ll need to refer back to a lot of these aspects quite a bit during your early days. Seriously, go read the article, it has a wealth of information for startups. And here is another good article I found on the incorporation process

In order to incorporate your company, it is usually a good idea to seek the help of a Chartered Accountant who specializes in Company Secretaryship and has a fair bit of experience under his belt incorporating companies. These guys stay rather busy, especially if they are good at their trade, so its a good idea to factor in a fair bit of time. Our initial estimate was that the entire activity would take about 3 weeks but we ended up taking almost 2 months to do this. Our company had operations from day one and so it was imperative that we had to finish incorporating before we could launch our site, and the incorporating process actually ended up delaying us by about 4 weeks or so.

I am told that the process has since been automated thanks to a web-enabled system that TCS (yes, the good old Tata Consultancy Services) has built for the Registrar of Companies and that this has greatly reduced the time taken to complete incorporation. Perhaps someone who has incorporated more recently can vouch for that…Aso, one step that certainly delayed our process was that the name that we originally picked was rejected by the registrar, and without offering any explanation. As part of your application, you need to provide a choice of names in order of preference as well as a brief explanation of your company’s proposed activities. You want to make sure you don’t pick too specific a name based on your day one plans because you don’t want to have to go back for every small change in direction/vision. For instance, we picked OrderMonger Online Services Private Limited with the goal of ensuring that it was generic enough to allow us to evolve our vision as we went along. Also, the domain URL name you pick really doesn’t have much to do with your company’s incorporated name although some consistency might help your marketing and brand recall effforts. Basically, while it will help to plan all of this together and ensure that the names you choose are available across all relevant media (trademark registry, domain name registry etc), you dont need the URL name to complete your incorporation process.

Lastly, I have often been asked how soon one needs to incorporate one’s company and the motivation in doing so. Like I stated earlier, this needs to be one of the earliest steps and in addition to allowing you to transact, operate etc, it also helps address the important issue of liability, especially in the case of a Public Limited Company. Once the company has been incorporated, any liability pertaining to the company is not on the individuals that form the company, but the company itself and that could be very important – note however that the corporate veil (this particular Wikipedia article pertains to the United States but I think the core philosophy is still relevant) is not always impervious to the law, and more importantly, I am no lawyer, so take this as just layman opinion.

As reward for all your efforts, you should receive a Certificate of Incorporation at the end of this step, and you will most certainly be excited to see this document at the end of all that labor. And you better keep a few copies of this certificate handy, you are going to need it quite a bit, especially in the early days as you go about setting things up. Good luck!

Startup Lunch Hyderabad – A hiring event for Startups

Startup Lunch Hyderabad, an event with the express purpose of facilitating hiring at startup companies in the city is being organized on Aug 23. Its a “speed dating” event of sorts for startups and people interested in joining them. This presentation, created for a similar initiative in Delhi, might shed some light on the idea. It is a not for profit event, and is scheduled for the 23rd of August, at Intellecap’s Hyderabad office (www.intellecap.net). Click here for details.

The event is free for job seekers, but participating startups would be expected to pay a nominal registration fee (say about Rs. 1000) in order to cover costs. If you are interested in joining a startup, or represent a startup company that is looking to hire talented team members, this is one event you do not want to miss. Please sign up at http://startuplunch.proto.in

The early days…

While the startup journey in general is super exciting, the early days are certainly more special than the rest – this is when the idea takes shape, the team starts to get together, you start making up To-do lists that are several pages long, your glorious business plan gets drawn up and you start taking the first steps towards establishing your startup. Each of these aspects is extremely important (and any of them is as important as the other) of course, and getting everything started right is fundamental to succeeding in your endeavor. Needless to say, you are never truly going to be prepared for the road ahead and whats coming at you, but the more thorough you are in doing your homework, the less harder that path is going to be.

I am sure each of those aspects deserves a few paragraphs even if just to get the key ideas across and I hope to address them in more detail in the coming days, but if I had to do this again in the future, here are a couple of key lessons we learned from our experience.

Firstly, you are in this journey because you consider yourself creative and capable of building something special (and chances are that you are right) and therefore, ideas will come easily to you – we had at least half a dozen ideas that all seemed worthy of pursuing, and not all of them were even remotely connected. While its tempting to go after all these “good” ideas, you have to stay clearly define your goal and stay focused – come up with a set of criteria that are important and use that to determine those goals, but once you do, relentlessly go after those goals. You simply cannot afford to get randomized.

The next bit is assembling your team – you obviously want to pay a lot of attention to this and you really, really have to like and get along with your team because chances are that you are going to spend more time with these folks than with your family over the next several months. And while the culture and compatibility are important, so is the need for being well-rounded. Avoid too much overlap in core competencies across team members.

Try not to treat your startup as a part-time exercise. I am sure thats inevitable for some of you considering the resource and financial crunch, but not being able to devote 100% to it certainly hurts more than helps. We originally started off as a part-time venture but when we finally made the transition to fulltime, it made an incredible amount of difference. And of course, no serious investor will even consider you worthy of an investment if you don’t consider your venture worthy of your own fulltime commitment. So while its probably ok to be part-time as you work on your prototype and drawing out your initial plans, you should be thinking ahead to a more fulltime commitment fairly early on.

Then there is the mundane stuff about registering your company, finding office space, your initial set of hires, some basic tasks to get the office started etc but more on that in another post. Take care!