Can Entrepreneurs ‘Shut Down’?

My column in the November issue of the Entrepreneur magazine: 

I write this in the midst of the US government shutdown. The Republican Speaker of the House – John Boehner has presented a ‘his way or the highway’ option to President Obama. Obama has hit the highway. 

Amidst all this, some of the most beautiful monuments in USA remain shut for tourists; and the confidence of American consumers, citizens and investors has reached an all time low. 

This extraordinary event has inspired me to ask, “Can Entrepreneurs be made to Shut Down”? If so, how and when? If not, why?

A failed venture is not a failed entrepreneur. 

Somewhere around 2005, Evan Williams and a few other people co-founded a Company called ‘Odeo’ in San Francisco that was built around ‘podcasting’. The founder and his team members struggled to make this concept work, until they were dealt by what I call an ‘earthquake’ moment – an event that just makes a business completely collapse. 

Apple’s Steve Jobs announced that iTunes would directly support Podcasts – and that essentially killed a small startup which intended to do the same thing. 

Did Steve Jobs and Apple ‘shut’ Odeo down? You bet they did! 

Did Steve Jobs and Apple shut the entrepreneurs behind Odeo? Not by any stretch of imagination. 

If you are good with names, you would have guessed by now that Evan Williams and his coterie were the folks who went on to co-found Twitter – a Company that we cannot live without today, and which is rumored to be worth over 20 Billion US$ when it IPOs in the US Stock markets soon. 

Take away? You can’t shut down entrepreneurs, because they are born to ‘Enterprise’. If you are in the middle of an earthquake moment, then I suggest you stand up, shake away the dust and rubble, have a hot shower; and get on with your next venture.

Don’t negotiate out of fear but don’t fear to negotiate. 

I assume you know that that John F Kennedy said this in his famous inaugural address. In the case of Obama vs. Boehner, it seems to me that Obama is not fearful of negotiating; and he will not let fear dominate his negotiations. 

Entrepreneurs have to negotiate all the time. It begins by negotiating with themselves – by convincing their soul that they need to leave their cushy jobs and careers and ‘start up’. Next comes the almost routine negotiation with partners, employees, vendors, financiers, clients and the government. 

I learnt negotiating the harsh way in my father’s socks factory in ‘Kalachowki’ – Lower Parel. The factory had over 600 workers working 3 shifts a day and the labor was completely unionized, by not so pleasant leaders. 

Every year around Diwali, the usual ‘unrest’ would start by workers demanding a more than affordable ‘bonus’.  Slogan shouting, placard thrusting and red flag hoisting would be the routine affair. Workers would stop our cars as we entered and exited the factory. Yeah. Everything you’ve seen in a Bollywood film featuring factories and strikes would come alive. 

My Dad, who had founded the factory, taught me a trick on how to manage this stress. He said, “Alok, be more cheerful, happy, smiley and pleased with yourself than you have ever been before, when this unrest starts. Your body language and demeanor will be the weapon to win this negotiation war.” 

I did what my dad told me (and even began humming a tune!) and was surprised by the results. By the way my Dad and I behaved, the workers quickly understood that the management was unfazed by the unrest and would not be intimidated. 

This lesson taught me an invaluable lesson for my future entrepreneurial ventures – to not be fearful, come what may. Nothing turns out to be as bad as we expect. 

“What’s the harm in asking?” – WORKS! 

In the hurly, burly, testosterone fuelled world of ‘getting what you want’, you adapt the well proven “What’s the harm in asking?” strategy. 

Almost a decade ago, when Reliance Communications was launching, the biggest and best advertising agencies of India were invited to pitch for creative and media services. 

The negotiations at the Reliance Office were typically brutal. Almost every last drop of profits and margins were squeezed out of agencies and media houses in the promise of the “largest media spends ever”. 

A couple of days after the final plans for outdoor hoarding designs were sealed, the agency selected and the head of marketing received a rude shock. One of the senior-most and oldest ‘members’ of the Reliance family called them and said, “You guys have paid too much for hoardings in Mumbai! What kind of rates are these? I can get much better offers.” 

The agency CEO and the Marketing Director were shocked by this claim and vociferously argued their budgets & prices and explained how painfully they had negotiated the hoarding deals. 

This senior family member did not pay heed to them. Instead, he summoned a meeting of all the major hoarding owners of Mumbai to their far flung office in Navi Mumbai. When everyone was assembled in a conference room, he said, “I will buy ALL your hoardings for the next 3 years for THIS PRICE. Take it or leave it. You have to decide before you exit this building and agree by signing on this deal.” 

The Agency CEO and Marketing Director were shocked by the price quoted and the strategy the senior family member had adopted. 

By the time the sun had set, ALL hoarding owners had signed, with a 30 % reduction to the earlier negotiated price! The strategy of “what’s the harm in asking” had worked. Mumbai residents will remember the almost permanent hoardings of R.Com that dotted our city for those 3 years. 

Lesson? Ask, Ask, Ask. Be OBNOXIOUS in your ‘Ask’, just like Boehner’s behavior. Then it’s up to you – whether the party on the other side is Obama or a Mumbai hoarding owner! 

First Win the war – then fight it. 

In one of our office buildings, a small office of ours came up for rent renewal after three years. This office housed 12 QC (Quality Control) people and was very crucial for our operations. 

I was shocked when my CFO informed me that the landlord was demanding a 50% hike in the rent rates! This was blackmail! The landlord was taking full advantage of the situation that we were in. 

The first few hours I was shattered and shuddered to think of the extra cost and the pain of not having the office. Then, I fortified myself and told my Head of Ops, “Dinesh – just do what you have to do to seat these 12 people in our current offices. Break walls, conference rooms, pantries – give me a plan in the next 24 hours.” 

Dinesh took 72 hours but he did come back with a plan and a dry smile. He said, “Alok, we can seat 12 people and we will not have to work out of the bathrooms.” 

I smiled, thanked him and then told my CFO, “Satish – call the landlord and tell him that we will offer the standard 10% hike rate. If he doesn’t agree, we are ready to walk out. Tell him that he has 24 hours to decide.” 

Satish made the calls and heard the customary “we will let you know.” 

The landlord did let us know in a day. He accepted 12.5% as a rate hike for the next 3 years. 

Lesson and take away? First fight the war in your mind. Figure it out and WIN it. Then go out there and fight it in the real world. You are guaranteed to succeed. 

Entrepreneurs unlike the big and mighty US government can never be shut down. It’s just not allowed.

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 Read ALL my other articles published in Entrepreneur mag HERE.

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