Startup 101 – How to minimize failure
Geetha Vallabhaneni – Startup 101 – How to prepare and minimize failure before you quit your day job.
Marzena Kmiecik: So if I was starting a business tomorrow, what would be my first step of prioritizing and who should I speak to? How should I prepare for this? What would the process be, in your opinion?
Alright, so, first I think the very first thing that you do is sit down and look at your finances. Because starting a company really does mean draining your savings for a while before you start to see returns. Unless a services company. I mean, you start looking for clients, and you see revenue right away.
Marzena Kmiecik: Have you ever been in a situation in your past where you had an investor before you even – or worked with somebody that actually had an investor right from the get go, where that cushion was already there? Where you could just produce and create?
That happens on the second round. Nobody invests in you the first time that your starting a company, because they don’t have a track record to look after. So if you look at the VC history, if you started a company and failed, it’s easier to raise money. If you started a company and work successful, it’s easier to raise money. If you started a company for the first time and they don’t know whether you’re going to be successful or not, it’s hard for them to decide. So it’s about the track record. Even if you failed, you learned lessons along the way. And that’s important for the investor to know. I’ve never been in that situation. I did work for a couple of startups where the founders were of other companies that were successful and they raised money out of the gate and it was good. But at the same time, if you are starting for the first time, be prepared to go on your own. We actually bootstrap for about two years, and that’s hard. Which means all of us have to make sacrifices.
Marzena Kmiecik: Can you talk a little bit about bootstrapping? What is it is for some that have no idea? Since I think all of us know what it means, we’ve been there, but for those that don’t, what does it really entail?
So bootstrapping really means you spend some money out of your pocket to incorporate into secure IP and also a lot of other little things. And that’s what we’ll talk about. Really starting a company entails a lot of things. Now, you just don’t wake up one day. I want to have a company, and you have a company tomorrow. You have to take care of a lot of procedures before that. So there’s money involved in that. And then, we you’re hiring people, you end up giving them equity and not money. So as a result they are spending their savings. Paying for their household expenses and nobody is earning a salary. So that is what bootstrapping really is. You all make a decision to create a product and take a chance that it will be successful before you raise money. Because these days, especially with we work in the mobile space. Its easy to go create a mobile app and show some traction before you go to the investors. And they have this now, an expectation that you actually make money before you go raise money.
Marzena Kmiecik: Because it has been done.
Exactly, exactly! It’s interesting. So always count that you’re not going to have money right out of the gate. And if you are actually going to go work for a startup that has money, that’s great. And it’s no different from making a decision of having to switch jobs. And then you asked a very interesting question about whether I should keep my job and work on the company, or I should leave the job, right? To me, you cannot navigate two boats. You have to make a decision. And if you’re not financially ready to start it, maybe you need to rethink about executing the idea, but if you think you have a great idea, you’re going to be successful, you should pursue it with full passion. And that’s just the way. There’s no second way about it.
Marzena Kmiecik: How do you, as a founder, don’t lose sight of what you’ve actually set out to do? And how do you keep that energy going for your team that’s very consistent? How do you not allow your fears to get in the way? How do you inspire when you don’t feel inspired at times?
Okay. That’s actually part of being a leader and a founder. Keep your sides on where you started. There’s a great Ted talk, Simon Sinek. He talks about the importance of the question why. Because before we understand why we are starting a company, we tend to think a lot about what am I building, and how am I going to build. But, in the beginning, you have to ask why am I doing this? And to me, the question really is…
Marzena Kmiecik: How am I solving a problem?
Exactly. Why? Is it something inherent in me that’s actually making me do this? Once you understand that, you always go back to that central point, even in the most frustrating moment, in the middle of a frustrating day, you are like, I am doing this because I care about this. Right? So you have to have that true north compass guiding you. And when you’re demotivated, this is the importance of having a mentor.
Marzena Kmiecik: And I was going to ask you, if you actually, along the way had mentors, and people that advise you and you felt fully secure to open up and just say, this is what is going on.
I do have that, and I have my advisors and my mentors from… and I reach out to them and say. Here’s what I’m going through and I think that executing and strategy going forward. It’s almost like a sounding board, because at the end of the day they can’t make decisions for you. Because they’re not fully involved in day to day activities, but at least they’ll say, here’s a situation that I’ve been through and here’s how I’ve dealt with. So the more data points that you have, the more decisions that you can make.
Marzena Kmiecik: Do you think they fear you with that confidence of saying, I am on that track? And if not, you can bounce those ideas between them and maybe shape it to be on the right track where you don’t feel alone in the process?
So, there are very few instances where you don’t feel afraid and lonely. And that’s just part of being a founder, by the way. And it’s how you deal with that. Because if someone tells you that they knew day 1, what they were going to do. That’s just, you know, that’s just not reality. And even if they have, that changes.
The successful entrepreneur always molds to the changing tide.So the role that mentors play is really nothing but a sounding board. Because at the end of the day, you have to, from your gut and instinct know what’s right and what’s wrong. And if you’re struggling with decision making, then you have to work on it.
I’ve gone through executive coaching in the last year or two, and it’s been super helpful for me. And I’ve actually advise anyone that’s about to lead a team or start a company—go through this. It’s an emotional intelligence test. So I do really well on keeping my head on under stress and empathy wise.
Marzena Kmiecik: Where do you think that came from?
Oh! I think, you know, goes back to lots of different circumstances, right. Having a family and a father that’s really supportive. And my father is a very calm and collected under stress. And I sort of learn from him. And it’s probably partly genetic, haha! I think. But you can work on it. And you know, mentors along the way in situations. You know, if you really honestly look at life, what is the worst thing that can happen? That you can starve? Or your child is starving? Or you’re going to die. If you face those, if you are saying that those are the worst things, nothing else in life can sort of mount up to that pressure. So you have a perspective, a healthy perspective about things.
Marzena Kmiecik: How do you go about finding mentors?
That’s a tough question to answer. And there’s no easy answer, because some people don’t have the time, you know? Everybody has loads of ideas, I’ve gone to many network events. Organized networking events.
Marzena Kmiecik: How do you find the right people to advise you? Because the worst thing that can happen is to be surrounded by people who inject hesitation in you, or question the way you process things or your goals. Or they inject their ideas. How do you pick the right people?
That’s a great question. First of all, if somebody is making you doubt yourself, they are not a mentor. And so keep that always in mind. Before you seek a teacher, or a mentor, right, you have to have a healthy sense of who you are to start with. Because a mentor can only help you shape peripheral direction and guidance, but you yourself have to really know what you are made of. So that’s my first way.
And the second point is, a mentor is someone you’ve known for a while. You know, once in a while, you do actually randomly run into a person and they’re great and you ask them a few questions. But a mentor is someone—it’s almost like it has to be a constant presence in your life. And you build a relationship with them. And a lot of depends on you, because those guys are super busy. You know, if someone is successful, and you look up to them, they already have a full plate. So it depends on you to say, here is a regular schedule. Maybe a monthly coffee that I’m going to go talk to them for an hour. But, it doesn’t have to be, by the way, don’t feel pressure that I have to come up with a smart set of questions to talk to them. At the end of the day, they are also human beings. So make a connection, make them care about you. And that’s a hard thing, because at the end of the day, why does anyone want to help you? They have to like you. And that’s the piece that people miss. Because they have to support what you’re doing, believe in it. Because at the end of the day if you just believe you have all the answers and your really super smart, you know, it’s going to cost you a lot of money.
Exactly! You know, whereas you say, I have this ambition. Here’s how I’m working towards it, and I could really use help, this and that. People are actually really willing, Silicon Valley is such a great place. When they recognize you have the drive and the ambition and the smartness to go with it, they are happy to work with it. I’ve met so many people that have opened doors for me, given me introductions that are meaningful for my business, that lead to great partnerships. And I keep thinking, why? Because somebody did the same thing for them.
Marzena Kmiecik: I actually noticed that about Silicon Valley. More than any other place in California. And like you said, I think it’s because they’ve experienced how that feels and what that has done for their career. And it’s paying forward.
Exactly. And it also instills the same values. Like, right now, I’m mentoring people, and I’m happy to go meet with people if they say, hey, I need an hour’s time.
Marzena Kmiecik: Like you have done with us! Hahah! Thank you! Thank you very much!
Sure! So it’s really about give and take. You have to bring that meaningful relationship.
Marzena Kmiecik: So talk about your startup. Talk about where you’re heading. And just tell us a little bit about what’s going on because you’ve mentioned that you’re actually getting into mobile space. That’s the most logical, I don’t want to call it trendy, but the most logical transition into technology where we’re all heading.
Yeah, sure. So I worked in enterprise software space for 10 years. And it was really clear, we thought the consumer space overtaken by mobile, we get everything done, we even walk with our cell phones with our heads down. But in the enterprise space, its still actually in their infancy. People are still trying to figure out what that means for their business. So then we looked at business software that companies use to run their business. CRM, IRP, payroll systems even. The software is old. It’s written either 30 years ago, or in CRM’s case, this is written 12 years ago. They’re great. They’re a great company, they’re a web company, but they don’t have a mobile component. So when we said, let’s build a mobile enterprise company, what we mean is become a really serious enterprise software company that’s focused on mobile. Think of the next generation business software, we are the platform. So we have a CRM, we have a civil intelligence platform; we have an IRP that’s completely integrated. And we have a payroll system and performance management system. So think of this classic SAP Oracle stack. But clearly gear towards the future devices. Mobile, and even the desktop machines that we would use will be touched base in a couple of years from now.
Marzena Kmiecik: So you’re really thinking forward in terms of how we integrate ourselves regardless of the new technologies coming out to not become obsolete at some point and create a platform where everybody has to in a sense rely on you in order to deliver.
Yeah, in order to build their business. So we want to build that mobile enterprise company. But as a stepping stone, we built a mobile app for sales force, because sales force themselves don’t have a mobile app. So we are paying customers, we are making some really great partnerships that we’ll talk about soon in our press releases. We’ve seen good traction. That’s the whole point of seeing something that lacking. Right, as a stepping stone, this was our first venture. Nobody is going to give us millions of dollars to build this huge platform. So how do you prove yourself? You can come up with a product you can execute, start with a mobile offering, a mobile layer for a great solution that’s already there.
Marzena Kmiecik: So when you decided to start this business, were you thinking already thinking of your exit strategy in terms of selling the company at some point or being acquired? Because it also seems at some point this will be dominating where somebody will buy you out. So I’m asking in terms of strategy on a business side. When somebody’s planning a business, an idea, how do they take it to the next level?
There are companies that build based on exit strategies. You have to have few exit strategies. You can’t really build for acquisition. Then you are actually betting on a couple particular companies. For me, personally, there are people who actually just build targeting acquisition. And that’s great, it works out for them. But for me, individually, I have to take different choices. Failure, of course, is always an option.
Marzena Kmiecik: So how do we deal with it? And the unpredictably, I think, of what’s next in the technology.
Exactly. So you’re always thinking about, okay, there’s an acquisition path, there’s a chance that we will actually be the next big company, so how do I plan to grow? How do I step aside and bring the people that can grow and scale the company? You have to think about it from day one, right? Because that’s just the real deal, there’s the chance…
That’s some amazing intelligence to have. To be able to think of those things way before you even step into the realm of, I’m starting something. To even go that way. I’m not sure if a lot of people even think about that. I think they’re stuck on the idea. This is what I want to do, without all the other pieces of the puzzle. To what extent do you think they have to do that homework in order to be successful in the end, versus winging it and really just holding onto that idea and everything else will fall into place? Just from your experience working with startups an see what’s going on in Silicon Valley, where do you find that balance of just, I’m going to go for it? Everything else will just happen.
I think really lasting successful companies, the difference between that and failures is thinking about strategy, execution. The most successful founders actually find people who can grow the startup. Because as a founder they can only grow the companies to a certain point, and then they learn lessons, right? Think about Larry Page, they stepped aside for a while, let who has experience running the startup and then they learn from him. And then take from that. So that’s the beautiful way of executing whereas not thinking about these things and just being obsessed about the product. It can work, by the way, especially if you are a consumer app. You have invented a really clever game, and that goes viral, and you really don’t have to think about scaling. Because that’s just making money and that’s all you want from the client. But if you’re really building a startup that’s lasting, then you do have to think about it from day one. Which is why starting a company really entails a lot of things. Sitting first at the drawing board and thinking about different possibilities. Product is a part of it, but there’s a lot more moving components around it.