Business, Culture and Entrepreneurship

Monday, March 31, 2008

New beginnings and firsts

For the first time since I began working, way back in 1988, I have quit a job without much idea of what I plan to do next. "Kidding apart, what do you really plan to do sri?" was the question one of my favorite engineers, posed to me. Obviously my earlier message that I might do some writing and possibly publishing was not serious enough. Another colleague, was more sensitive and subtler in his approach when he stated, "Sure we all have our dreams, yours maybe to write or publish, but what do you really plan to do?" So note to all of you out there who plan to make career changes, regardless of how vague or opaque your plans, it appears the world only wants to hear definitive things. I am still working on mine.

In this new life of mine, I have already achieved a first - a road trip with the family (to Mysore) without my laptop. Even on our last vacation (to Kumarakom, Kerala) I convinced myself (and the family) that I'd use the laptop only for journal writing and not for checking mails or doing work! I'm happy to report that not only did I survive, but I did not miss the luggable nor display any overt withdrawal symptoms. In an aside, actually got to read several essays from Stephen J Gould's "An Urchin in the Storm" - had to read several of the reviews multiple times, but that's fodder for another post.

Monday, March 24, 2008

People - the lifeblood of an organization

From my seventh article in the Start-up Logic entrepreneurship series in the Hindu BusinessLine

In every entrepreneur’s life, there comes a moment when a bulb goes off, “Darn! We are a real business.” You’d think that having embarked with much thought (or for some of us with little thought) on the path of entrepreneurship, learning that you are a real business wouldn’t surprise you. Of course, such a realisation usually occurs when the problems of running a real business put in an appearance.

When you first start your business, it all seems more fun than work — figuring out what you want, whom you are going to make the journey with, whom your customers are and what they want and if you have raised capital, what prospective investors want. Notice, but for the first day, you haven’t had time to think about yourself.

However, soon each new day seems to bring up a number of issues, ranging from life-threatening cash-flow problems to stumbling product development, stuttering sales and marketing and the inability to hire good people fast enough. We will look at each of these issues, and how best to address them over the next few weeks.

Let’s begin with the good news – you are not the first entrepreneur to go through this. The bad news is that this knowledge does not make it any easier to get through this period. As with adolescence that every one of us has had to go through, companies too go through an equivalent phase. Only this seems to appear a lot sooner for entrepreneurial firms and, at times, more than once; as with any hormone-laden teenager this will be a time of monumental emotional ups and downs for your company and you.

The one thing that can help you navigate your way through these emotional rapids is having great people on board with you. I spoke of business being all about people earlier and this is truest in such times of corporate hormonal sloshing. Hiring, retaining and motivating great people is far easier said than done and fixing hiring mistakes always takes far longer than we’d like. The truth is companies that learn how to do this well are the ones that grow and prosper in the end.

Read the rest of the article here.

Sunday, March 23, 2008

First time entrepreneur - raising capital or NOT!

The topic of first time entrepreneurs and specifically the experience of raising (or not) of venture capital is a recurring theme on a number of blogs, including Sujai in his Wireless India blog, Sramanamitra, To add to the discussion, here is a brief snapshot of my experience.

I have had the singular fortune of trudging up and down Sand Hill Road, Embarcadero Road and even places East of 101 the first time in 2000, about a year after we had started Impulsesoft to try and raise a series A with valley VCs. And then again in 2004, this time with a customer, with whom there were short-lived discussions of a prospective merger, to raise money as one (new) entity. While our business plan got better (not to mention our presentation skills) we had little else to show for it. We were of course flummoxed that direct competitors such as Widcomm were busy raising their series B, with pretty much the same game plan and San Diego burn rates. Luckily our inability to raise venture money was a blessing in disguise, for it turned out that we knew very little about communication systems (which is what we were building), product development (our first products were at least 18 months late) or even running a company.

In the intervening years, we spent a reasonable amount of time in India with both white-haired and as-yet-to-begin-shaving VCs. The most interesting insights I gained with the Indian VCs in the early years, was how new they were at it themselves; most of them were playing bankers without any venturing and many of them evolved to be investment bankers giving up any pretense of venturing. While we did get definitive term sheets (they wanted 40% of the company for a series A) as well as tentative offers (as early as 2001) from a interested corporate buyer, the best thing we did (in hindsight of course) was not raising any venture money. For had we raised money in 1999/2000, I seriously doubt we'd have survived the first industry downturn we faced in 2000/1 or subsequent periodic announcements by market pundits of the imminent death of Bluetooth. We saw funded Indian companies such as Karna, Kshema and Microcon being encouraged by their investors to merge or divide in an attempt to multiply. Others companies, such as SiliconWave (private and $90M raised) were picked up for a song; Conexant and Lucent quietly exit the Bluetooth business. Poverty, in addition to being character building was responsible for our survival. Of course, lack of capital did choke many internal initiatives so I don't recommend it as a business strategy.

NS Raghavan, ex-CMD of Infosys through his Nadathur Investments did invest in Impulsesoft as an angel investor (and he truly was an angel investor) and provided us with a line of credit as well. That and good old revenue served as well for nearly seven years till we were acquired by SiRF Technology Inc.

Tuesday, March 18, 2008

Communication and culture in organizations

A few months ago, I wrote about the need for communicating early and often and a recent article by Toni Bowers, Senior Editor, TechRepublic titled "Say what you mean, mean what you say" highlighted the sore need for clarity in these communications, even if done early and often! The readers' comments to that post, due to their specific nature were extremely illustrative, reinforcing the core message of how critical clear communications are, particularly when it comes to individuals and dishing them unpleasant news.

Less than ten days ago two of my long-time colleagues, sat me down and after some initial politeness ("you have issues rather than you have a problem") they got down to their core message "We don't believe you handle unpleasant stuff well, what do you think?" Talk about a topic for reflection! The reflection has made me particularly receptive to Toni's post and the discussion thread thereof.

Toni's core message is -

  • Be direct and specific when giving feedback, particularly relating to problems
  • Don't be heartless but use simple statements that preclude misinterpretation
Key points the commentators added include
  • Communicate expectations up front (my early and often mantra) to avoid misunderstandings
  • Don't tell the team they have a problem, when you want to communicate to a particular person - do it one-on-one
  • Be open and interested to find out reasons for why you are where you are (ask and listen, not just talk)
As with all good advice, once stated it seems simple and self-evident. The fact that more of us don't practice it consistently only points to the need for periodic reminders. Which brings me to the whole running water and rock metaphors of many Zen koans. The Buddha said (with regard to cultivating virtues) diligent practice will work like a "... small stream being able to pierce rock if it continually flows." Alas this is true not just for virtues but for bad habits like poor or no communication, a constant stream of which can wear down the enthusiasm of even the most motivated team member.

Even one dinosaur brain manager or toxic teammate when not dealt with direct and clear communication can start a tear in the fabric of your organization's culture. Subsequent failures of communications, however small, only grow this tear till soon all we'll have left will be shreds! So whether rock or fabric, our organizational culture needs continual renewal through simple, clear and sustained communication - to grow and prosper!

Saturday, March 15, 2008

Retention, culture and building products in non-urban India...

Sranamamitra talks about Sathyam's GramIT rural BPO project in a recent Forbes article and adds in her blog,

I would love to see more projects like this come about, get funded, and scaled in the commercial domain in India. I see rural / small town BPO as a very interesting opportunity for the next phase of India’s evolution as the world’s back-office
While undoubtedly true, her assertion does a mild disservice to a slew of entrepreneurs, who have already begun doing this, not just in BPO/KPOs but for tech software as well. Mainstream business media in India is still caught up with how many bodies a company has ("TCS plans Pune campus, to hire 10000") or how many million dollars they are going to invest ("Nokia Siemens to invest $100 m in India!") So the Sathyam story while definitely worth telling (and yes big firms can have bigger impact), it's the little guys who are leading the way. Entrepreneurial firms in India have been innovating in their business models, organizational development and culture, over the last decade by going to Tier 2 and smaller towns. Two such efforts that I have had first hand experience and knowledge of include an engineering development center in Vellore and Integra, a provider of pre-publishing services in Pondicherry.

Before I talk of these folks' experience, (better yet invite them to talk about it, to take a leaf out of Sramana's blog :-)) it is worth addressing one other question. A commentator on the original post asked,
Maybe you can comment on why Indians in 3rd or 4th tier cities would work for $1200 when they could move to a Tier 2 city and make many times that.
People in India, actually work in smaller towns (many times at or near their hometown) for the same reasons, that people want to work in South Portland Maine, or Kalispell, Montana - that they are not the Bay Area or Boston, where though the salaries are higher so are the house prices and commute times. And of course folks who work in small towns usually have (extended) families near. [Outdoor sports, unfortunately in most Indian small towns are yet to bloom unlike their counterparts in Montana and Maine :-(]

In both these companies the founders and operational managers discovered what Hal Rosenbluth (in his book "Customers come second") found when they set up their first backoffice in Linton, North Dakota. In his words - "a pattern of quality work, with no absenteeism and no turnover. [...] morale was high and that office was the epitome of teamwork." Granted Bangalore firms such as Zoho and earlier our own firm Impulsesoft have successfully built teams, sustained teamwork and retained folks through downturns and pay freezes/cuts, but the pressures of the big city exist as in the Bay Area. And in many ways everyone else has settled for 14-15% employee churn as normal.

It is possible to get away from this is what the folks operating outside Tier 1 and even Tier 2 cities have discovered - a motivated, eager to learn and committed, albeit at times inexperienced, workforce. One of the managers in Vellore stated it as, "People still have old fashioned views of work and contribution. Any engineer who moves to Bangalore whether he gains experience or not, gets an entitlement attitude within the year."

SNS Datascribe is another firm that I have come across recently, operating successfully for several years from the outskirts of Coimbatore. Anu and Sriram at Integra have grown from strength to strength operating out of Pondicherry. I will try to bring their voices to this discussion directly.

Friday, March 14, 2008

Customers - finding, keeping and letting go...

From my sixth article in the Start-up Logic entrepreneurship series in the Hindu BusinessLine

"A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him,” said M.K. Gandhi. As with many of Gandhi’s teachings, it is hard to disagree with him, but harder still to follow his simple advocacy of direct action.

Wednesday, March 12, 2008

A Stake in the Outcome - Building a Culture of Ownership

These last six months, I have been doing a good deal of reading; on average maybe two books a week - at least one of which has been a business book! I have gone back to reading books that have been in my library a long while such as Paul Hawken's Growing a Business as well as reading new (to me) ones such as A Stake in the Outcome by Jack Stack and Bo Burlingham.

I ran across A Stake in the Outcome (ASitO) while browsing business books at the Easy Library (a great online library with a brick & mortar presence in Bangalore). Having read and been influenced by Bo Burlingham's more recent Small Giants, I began browsing ASitO at the library itself. As the saying goes, "When the student is ready, the Master will appear!" Certainly that's how I felt as I scanned the book quickly right there and subsequently brought it home to read.

Chapter 3 titled The Design of a Business, begins:

Most people, I know, don't think about the company they're designing when they start out in business. They think about the products they're going to make, or the services they're going to provide. They worry about how to raise the money they need, how to find customers, how to deal with salespeople and suppliers, how to survive. It never occurs to them that, while they're putting together the basic elements of the business, they're also making decisions that are going to determine the type of company they'll have if they're successful.
I felt someone had just hit me on the head with a two-by-four. Every week I meet someone who is thinking about starting something. Nearly every last one of them talks about their product or service idea and if at all they talk about their company, its only when they intend to "flip-it" ("Built-to-flip" as Jim Collins speaks of as does Sramana Mitra in a recent blog entry). Jack Stack in contrast, states clearly that

Ownership Rule #1
The company is the product
It is worth pausing here and reflecting on his assertion. All too often I see entrepreneurs, young and not-so-young, pitch their businesses as I have heard Hollywood scriptwriter's do! "Think Netflix but for Indian movies," " meets iTunes," "Google but for contextual search." I'll refrain from speculating whether the internet bubble begat this or this begat the bubble and what role VCs had to play in this. This focus on what a company does, rather than what a company will be, Stack asserts misses the opportunity to explicitly design your business from ground up. If you haven't figured it now by now, I agree whole-heartedly.

In many ways, the practices of visionary companies that Jim Collins and Jerry Porras discuss in their book Built to Last have been explicitly operationalized in Stack's company Springfield Remanufacturing (SRC). The big difference is that Stack's direct writing style and first-hand experience makes this a gripping read rather than an dry business book. Also unlike most business books that appear to document management's clever (often infallible) strategies, Stack walks us through both the good and poor decisions they made, as they set out to remake SRC. In the end (in fact in the epilogue), Stack quotes Herb Kelleher, cofounder and former CEO of Southwest Airlines responding to The Wall Street Journal's question on what he meant when he said Southwest's culture was its biggest competitive advantage.

"The intangibles are more important than the tangibles," Kellher replied. "Someone can go out and buy airplanes from Boeing and ticket counters, but they can't buy our culture our espirit de corps."

ASitO walks us through SRC's journey of building such a culture of ownership from that day in 1982 when Stack and his managers did a management buy-out of their struggling engine remanufacturing factory to twenty years hence when their 10cent stock was worth $86 (since then has grown to over $136). Most importantly the authors don't romanticize the journey and are explicit in periodically setting our expectations with insights such as "Stock is not a magic pill" (ownership rule #4) and "Ownership needs to be taught"(OR #7).

ASitO is a must-read for any one contemplating starting a company or looking to effect change in their organizations through employee participation and a culture of ownership.

A much more detailed summary of the book itself can be found here