Wednesday, January 30, 2013

Mark Cuban

Recently, I started watching 'Shark Tank' regularly and was very impressed with Mark Cuban as an investor / judge. He almost always, listens well and talks the last. His comments and rationale for 'yes / no' decision are very insightful. Mark focuses on all the right things to make an investment decision: quality and commitment of founders, product-market match, proof of concept and then interestingly, some heart, emotions and theme.

I explored more about him - his blog is equally gripping. Of the ones I read, I liked Stock market - where he lays out 'supply demand' dynamic of stock markets and how inefficient they are, and Fox News Should Watch Dancing with the Stars, where he points to an interesting human psychological trait - to save your hero, but ONLY when required. Still trying to understand his views on politics..

Why celebrities love to be hated?

To trigger a suppressed human emotion - hatred.

My recent FB feeds are full of 'I hate SRK' messages. We love to hate celebrities - Himesh Reshamiya,  Ravindra Jadeja, Rahul Gandhi, Narendra Modi, SRK, Salman,  Justin Bieber, Kim Kardashian, etc. - every country / culture has a list of celebrities people just hate. You talk about them all the time, you search them forever, you join 'I hate X' groups, you are obsessed with them.

Isn't it what celebrities want? No wonder - many celebrities attempt to create a personal image around 'being disliked'.

As civilization has progressed, humans have learnt to control natural emotions, particularly the negative ones such as hatred, anger, irritation. If you don't like a guy in your company, you can't say it openly. If you hate your neighbor, you can't say it in his face. If you hate a friend of a friend, you can't say it in his face. Have you seen a FB message 'I hate you'? People just talk about it in low tones.

A person can let out many of his negative emotions with his closed ones - but not hatred! Celebrities are a perfect vent. You can openly hate celebrities. And celebrities love it - they have created a strong image in your mind.

Wednesday, January 23, 2013

Equity vs. Cash = Sprint vs. Marathon

In the hyper glamorized world of high tech entrepreneurship with billion dollar exits and focus on equity growth, it is easy to forget the traditional and age old way of doing a business - maintain positive cash flow and earn profits every year. The current breed of entrepreneurs, especially the educated ones, tend to forget the second type - which leads to missing out on good opportunities.

Fundamentally there are two types of companies: Equity growth focused and cash growth focused. The two require different mindsets and approaches from the founders.

An equity focused company is always running a sprint to grow as fast as possible. Scale up acquisitions, scale up employees, scale up products, scale up offices, scale up investments - because you need to finish the race before your competition catches up, or market dries out, or investors lose interest, or public hype dies out. When the CEO looks at P&L, he looks at growth, and not profitability.

On the other hand, a cash focused company is like running a marathon - focus is on preserving energy (cash) to sustain for a long time. Cash is the real king here. Founders focus on cash generation, working capital management and cash flow statement. They focus on cash salary and dividend income. Most small businesses like restaurants, real estate, shops fall under this category.

Though a company can only have one of the above two DNAs, there are lessons to be shared. If you are an equity focused founder, make sure that you do not lose focus on your cash flow statement. If you are a cash focused founder, make sure that you do not lose focus on growth and re-investment of your cash.

Aspiring entrepreneurs should consider traditional cash businesses and not be completely swayed away by '1 in a million chance' billion $ exit. You can still be rich, enjoy a good lifestyle, generate employment and be truly your own boss.

Sunday, January 20, 2013

Product review: Contactually - email and contact management

I have been using Contactually for a month now and would highly recommend it. It is a contact management system which integrates with Gmail and helps you keep in touch with personal and professional network.

Initial set up is easy, but takes up time as it integrates with Gmail / LinkedIn accounts. Once it fetches your contacts, you need to create buckets for contacts such as friends, family, colleagues etc. The bucketing process is manual and can be cumbersome. Good thing developers have tried to gamify the process by creating the 'Bucket game'.

Once the set up is complete, you will receive a daily alert with people to reach out today. You can set up frequency of alerts for contact buckets, for e.g. you want to contact your family members every 14 days, and your referrals every 2 months. You can set up your weekly target of contacts to reach out to.

Bucket game needs to improve - contacts should be prioritized in a better way based on communication history.

I love the product - it is an easy way to keep in touch with your contacts. With the email and communication clutter, this can be a great tool to 'actively' manage your network.

Saturday, January 19, 2013

A founding team is like an unmarried couple wanting to have a child

There are no social / official obligations towards each other, yet the couple needs to work together towards a higher purpose of giving birth to and raising a child.

A founding team is similar - each individual has no obligation to stay in the relationship, yet they decide to work together towards building an idea into a business. Each individual should have a higher level of commitment to make it work. The chemistry between them should be perfect.

Which means:

1. Don't take any risks: Look for a co-founder as if you would look for a mother / father of your child. As a rule, co-founder should be your friend over a long period of time. Beware, knowing him at a personal level is not enough - ideally, you should have worked with him closely on a professional assignment. This is critical as you will be amazed how people behave differently in professional settings.
Another tip: Your close family / spouse should know and like the person - it will help you a lot!
Hiring a co-founder is a waste of your time. Employees are hired, not founders.

2. Matching passion and ambition: Make sure that the co-founder matches or exceeds you in the level of passion and ambition for the start-up. You will have the same vision for the company and put in similar number of hours to achieve it.

3. Complement at personality level, not skill level: Introvert + Extrovert, detail oriented + intuition oriented, high energy + level headed, impatient + patient -- look for how different he is from you. Complementary personality traits will help you nullify the waves of uncertainty and anxiety you will face.

Complementary skill sets are a nice-to-have, but not essential. A skilled programmer + a great salesman --> is it an ideal combination? Yes - only if both do not lose patience after 3 months of no revenues. That being said - one must have personality trait is: willingness to learn new skills.

4. Communication is the most important thing: Which is the single most important trait you should look for? My bullet to the head answer is: can you communicate with him freely? Does he listen to and respect your views? Like any relationship, communication is the fuel to keep the engines running.

5. Longevity is critical: Raising a child is much more difficult than creating. Is the person committed to the company for a long haul? Can he face tough times for a long period of time? Will he stay around after 5 years if the company survives?
Also look beyond personality, at realities of life - does he have debt? Is he financially comfortable? Does he have the required family support?

There was a reason I referred founding team as a couple - 2 is the ideal founding team size. 3 is a stretch and beyond is chaos. What about 1? Start-up is a big lonely world - you need somebody to talk to. If you insist on being alone, invite your spouse to be the co-founder (unofficially though!).

So, get the genes right!