As featured in the Economic Times on Saturday - 23.11.2012:
A few months after I started Contests2win.com - my first start up (in 1998), I got an offer to sell it. I called up my lawyer for advice. He sounded excited and said, “Alok, sell your business and buy yourself a new car.”
Thankfully I did not follow his advice and have the honour of writing this column for you.
The past 14 years have been fun! I’ve managed to start companies and sell two of them. My medal of honour is that I sold my last company Mobile2win to the great Walt Disney Company.
While starting up, executing, operating and exiting my companies, I have learnt the following 5 immortal lessons:
1. Hire Soldiers, not Rock Stars.
Some of the people I employed way back in 1998 are still with me. They are the best performing professionals I know. When I hired them, they were passionate, anxious to learn and ready to go. They were soldiers ready to march. They were not qualified with acronyms or degrees or ‘work-ex’ and all that jazz. They had a fire in them that would only be satiated by hard, grueling work.
The mistake I made was that I also hired some ‘Rock Stars’. These were spoilt corporate professionals who came on stage to sing their own song. They had rulebooks and silly ideas, all learnt in business school. They had egos that were larger than King Kong. These guys added no value to my business; instead created disruption.
Lesson – Hire ungroomed, hungry people to work with you when you start digging the trenches. You don’t need a Prime Minister to be part of your gang.
2. Understand what Business Model really means.
A lot of entrepreneurs I meet are quick to blurt out, “Sir, my revenue model is x or y.” When I ask them what is their ‘business model’, they seem flummoxed and mumble, “Isn’t that the same thing?”
Well, it’s not! A business model is what will make your business valuable. A revenue model may or may not be a part of the business model!
Let’s take Google as an example. The business model that the founders had in mind was to make searching the Internet as easy as the two times table. Just type and go.
The founders intuitively knew that if they could make search very easy and simple, Google would become a major habit of everyone in the world, and that habit would create ‘value’. Well, it did and how!
Much later, Google began to offer ‘Ad Words’, ‘Ad Sense’ and a host of features to advertise on Google. This became their revenue model - an important part of their business model.
Lesson – Business Model is what will ultimately create value. Get that right first.
3. Don’t let a VC choose you. Instead, you choose the VC.
I developed clinical blood pressure owing to a duel between a VC and my co-founder in Mobile2win. Both of them hated each other. The VC was so vindictive that they wanted to close down the business just to teach my co-founder a lesson!
This was entirely my fault. I allowed this VC to enter my company just because they wanted in. I was naïve, foolish and also a ‘Bhikari’ (penniless beggar). I had no source of funds and when Count Dracula came along, I happily offered my neck.
It took a good two and a half years to keep Mobile2win running. I even managed to prevent my co-founder and VC from committing murder. Later I let go of my co-founder, hired a CEO and turned the company around. That business was acquired by Disney!
Lesson – Conduct due diligence on VCs. Talk to entrepreneurs who have been funded by them before. Ask them how it is to share a bathroom with them. Then make a decision.
4. Think like a Founder, not like a CEO.
A start up founder is like God. She takes care of everything and everyone. She can see things coming and can prevent disasters.
CEOs on the other hand, are execution folks. They get things done. They are ruthless, cursed people who behave like excavation truck drivers in a cemetery. They need not be the founder.
Pierre Omidyar – the visionary entrepreneur who created ebay, was a great start up founder! He set up ebay and made it a very useful and scalable business. But when the time came to take ebay to the ultimate level, he turned it over to Meg Whitman – a professional CEO.
Lesson – Start your company and then quickly decide if you are CEO material or not. If you aren’t, hire a capable CEO and feel proud about your decision – not guilty!
5. Don’t be silly.
If ‘Titanic’ was to be made into a Bollywood movie, I can visualise these scenes: The ‘hero’ would rush into the boiler room and try to stop the water from gushing in by using his strong muscular shoulders! All along he would urge his love to escape. Then in the end, he would swim out, meet her and dance to a song on a lifeboat.
That’s silly and stupid.
Lesson - Don’t be silly and stupid when it comes to your start up. If you see a disaster; save your life and abandon ship. Closing down a business that’s not working is an act of bravery, not shame. And remember, you can always start up again!
After going thru the article, few points reflects the way I was running my business. Specially Lesson 5, even in the time of disaster, I tried continuing my business to satisfy my ego. But once realised that ego is not going to work, I simply shut my shop for sometime, restrectured my plan and startred working again and I see the results today.
It is always important to be smart, alert, brave and focussed to take few decession which may be hard to understand at that moment but once the decession are taken we can feel the change we always wished for.
1 - Bang on.. Currently searching for my first batch of Lieutenants..
2 - Bang on..
3 - Now this requires (50% Great Product) (30% Luck) (20% Craziness)
4 - Need to experience it first hand..
5 - This really requires Courage.. I Know it..
Brilliant insights, decorated with examples and anecdotes. You are a great story-teller Alok, perhaps part of the explanation behind your success as an entrepreneur.
brilliant , just brilliant
It gave me great joy as soon as I read part one : Hire Soldiers, not Rock Stars. Like your prayers have been answered.
Thank you Alok Sir, for writing this.
I am a single founder, single employee startup, and most of the people who came in contact and shown interest to join were carrying similar baggage of being a rock star. They expected us to remunerate them as they are being compensated now, apart from asking owner ship equity, that too without any monetary investment from their part in the startup.
Now with your insights I have received from this, the way ahead seems so clear. Identify and recruit soldiers, build an army.
Thanks once again, Alok Sir.
Alok Sir, I am getting addicted to your writing... it’s so smooth and awesome!!!
Gr8 write up with examples, which made a dumb person like me understand the true meaning of Entrepreneurship, Thank you!! Looking forward to meet you soon!!! :))
Its like reading a motivational book.
Alok is not telling different things in 2 different days, but every time I read it, I get a inner kick, like reading a book of Rabin Sharma or Wayne Dyer... And everytime I get some fresh air to tighten my belt again :)
I disagree with your last point:).Not always , but in most of the cases.
Once someone told me to tell him one business in this world which is not profitable!!.
I had no answer because there is none to look at, so the point is , if the business is not growing the way it is supposed to be , Then people should stick to it until they could find the pinpoint of the problem, Thats the startup !!.To make decision ,implement them , goes wrong ,fall back , start again .
I think for that to be done , One should be aware of the core skill of the business they are running , People running technology business should be aware of technology , People making medical machines should be wither a doctor or a mechanical engineer.:)