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Dilemma of an entrepreneur, whom to seek advice from and whom to ignore

Startups are picking up in India, and so is the ecosystem. Many people now want to be part of startups, be it as an entrepreneur, investor or employee, and this definitely is a good sign. An entrepreneur, during his or her startup journey, meets, interacts with, and seeks advice from lots of such people. The right advice from the right people can be extremely helpful, but at the same time, people who don’t have enough startup exposure can mislead entrepreneurs.

gyani

Source – Jokesmantra.com

From my experience – founding two startups – I’ve created some categories of such people. I warn you not to spend much time with these folks.

Fake Investors – Many people nowadays call themselves angel investors, but do not actually actively invest. They may or may not be part of an angel group. They will reach out to you, give you half-baked gyan, and ask you to send them all kinds of documents. Mostly, they don’t have any intention of investing in your startup, and can easily waste your 3-4 months.

For example, we at stagephod.com were covered by Economic Times, and thus were approached by a fake investor. He had no knowledge about startups, let alone video maker marketplaces, or any kind of online marketplace for that matter. He just said that no one in India was creating a market place to hire video makers, and that was why he in interested in investing. He even sent us a letter of intent. We were lucky to have past experience on our side; we thus gauged his interest (or lack thereof) early and saved ourselves lot of time and effort.

Not-so-genuine entrepreneurs – These are people who started ventures but didn’t apply themselves, did not execute much, and closed their startups after a few months. These people have lots of general gyan to offer, without much substance on the topic of actual execution. Interacting with these people can mislead you.

Fake wannapreneurs – There is no problem with being a wannabe. The problem only begins when one intentionally or unintentionally misleads people with one’s own half-baked gyan. You find these people in all kinds of startup events, but they actually don’t have the courage to start up, or the intention to. They generally give gyan about what works and what doesn’t, what is scalable and what isn’t, etc.

Startup enthusiasts – Just to give them a category, we can call rest of the misguiding people startup enthusiasts. They do not have any practical knowledge about startups, or doing business in India. Generally, these people are experienced professionals and hold senior positions in IT or at consulting companies. Some are associated with startup related organizations/groups, or investment films. They try to show off their startup knowledge, which they have acquired either from their batchmates who are doing startups, or from startup blogs or from startup events they have attended.

This brings me to the point. How should we separate sound from noise? Whom should we trust and seek advice from? I have a rule of thumb for this; you should only take advice from people who have been there, done or are doing that – people who are actually getting their hands dirty, executing rather than just talking. Some of them are:

Entrepreneurs turned investors, or those who invest actively – Generally, these people give quality, relevant advice. They know the problems startups actually face, and can help you with refining business models, and give you execution tips.

Entrepreneurs who have built a company, or are in the process of doing so – They understand what it takes to build a business in India. They can share insights about running a business, and can also introduce you to the right people and processes.

Genuine RIP startup’s founders – These are people who have put significant effort into their startups, given them their all, have come out with different solutions, pivoted, and have actually  done most things right, but somehow couldn’t sustain their startup. These guys will also have some useful insights to share with you.

Domain Experts – Every startup has had to crack some key problems in order to succeed. These problems could range from how to crack B2SMB sales, how to build a team of large inside sales people, and how to engage users more, to what the pricing strategy should be, what type of content one should write, etc. A domain expert can definitely give you insights about all his problems. These are people who were associated with now-successful startups in their early stages.

You should figure out what the key challenges in your startup are, and when you meet startup gurus, ask them these specific questions. There are people who can help you, but if the guy still gives you general gyan, you know what to do.

Last but not the least:

Intuition – Because no one knows you better than you do. You followed your intuition and took the startup plunge. You have to continue doing that for the rest of your life now.

I have written this post in the context of startups, but this applies to every scenario in life. For example, just as a project manager at an MNC can not give you advice on startups, a successful entrepreneur might not give you relevant advice on relationships. So be very selective when it comes to taking advice, as not every connection is a good connection.

Could you add some more archetypal startup people, whom one should either avoid or follow? It would be great if you mentioned your experiences too. Let us know in the comments.

 

Follow me at @losesaga

This article was originally published here 

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10 Comments

  1. i really like this one nikhilesh. the wrong advice from the wrong person can be dangerous. 

    i think startup enthusiasts are not such a bad category of people to associate with. don’t seek advice from them. but do not shut them out. if they are great at networking they might connect you to the right people because they are helpful by nature.

    also, “failed entrepreneurs” is a term i don’t agree with. imho failed ventures don’t make failed entrepreneurs 🙂 but yes, entrepreneurs who have had startups that didn’t work and shut them after realising it won’t work MAKE GENUINE ADVISORS as they understand and appreciate the actual pains of starting up and don’t want anyone else to make the same mistakes they did. 

    awesome post. keep sharing! also pls always add your twitter handle at the end of your posts. it helps me mention it while tweeting.

  2. Thanks Asha!

    Changed failed entrepreneurs –> RIP startup’s founders

    I agree with you on ‘Startup enthusiasts’ part. Actually I was referring to those people who intentionally/ unintentionally misguide entrepreneurs just to show them cool/ knowledgeable. I do not have a term for them so wrote Startup enthusiasts.

    Yes there are good people also who genuinely help. I haven’t included them in this category. 

  3. :)))) you’ve covered great points nikhilesh!!

    what i love most is the honesty in this article. there are folks who show off and misguide others. and there are lots of them!!

    in fact you must read these two interesting posts – http://therodinhoods.com/forum/topics/attending-a-start-up-event-may-god-save-you-from-these-6-out-of

    http://therodinhoods.com/forum/topics/comic-cofounder-needed-toons-need-not-apply-1

  4. Awesome posts!!

    Thanks for sharing.

  5. Hey Guys,

    We are forgetting the “Guru Mantra” for start-ups – Alok Kejriwal & the Rodinhooders. Why beat around when there is such a selfless forum and super experienced and ‘gyanii’ moderator.

    Nikhilesh this doesn’t in any way take away the learning from your article. Its very well written. 

    I am just trying to emphasize that because these nuisance exists all the more reason that this forum be exploited and its value realised.

  6. Agree.

  7. manish – u stirred me on a sunday!!! lolz

    arrre i’m hardly “super experienced or gyaani” – i learnt everything on the fly!! (chk my chat show with prateek!!)

    the only thing i am, is in love. with my community! and i love what it stands for and how every rodinhooder reaches out to help the other!!

    🙂

  8. You are being modest Asha. And then there’s always the Alok Kejriwal!!

  9. alok is always there for everyone. that i will never deny 🙂 and yes, i totally agree with you, communities help with seeking advice, genuine advice 🙂 

  10. Check out what I wrote on VC = Venture, Vulture and Vampire Capital

    ‘VC’ business in India celebrates 10 years in 2010 and I am inspired to write this column as tribute to the best form of Capital ever invented; to dive deep into the skin of this monster and present my humble learnings in this space.

    VC = Venture Capital.

    Exactly a week ago, I was fortunate to present my games2win business update to the Clearstone Venture Partners top bosses in Santa Monica. Clearstone is the lead investor in Games2win (g2w).

    In the cozy and large conference room sat Bill Elkus (founder of Clearstone), Jim Armstrong and my board member Sumant Mandal.

    I had drawn a large circle on the whiteboard – representing our business of g2w. Within the circle I started carving out areas (think pie charts) that defined the business lines of the Company. The carve outs showed online games, portals, social games & virtual worlds. It quickly looked quite crowded. Yet I had a marker in my hand to fill in new sections representing our forthcoming iStore games and Android games.

    As my marker approached the circle once again, I was nervous. This was the classic ‘doing too many things’ syndrome. My marker touched the white board and just as another line began to appear, Jim Armstrong, hollered at me in a rather stern voice and said ‘Alok – don’t tell me you have more offerings to explain to us’?  I calmly said ‘Yes Jim, we have these new lines rolling out as we speak and…’ Before I could complete my sentence, Jim suddenly sat upright on his chair, broke into a big smile and exclaimed loudly – ‘That’s audacious Alok – and we love you for your audacity’!!

    I was instantly relieved and in a typical defensive style mumbled ‘Thanks Jim – we are pursuing very synergistic lines and not vague new ideas like mail or chat’. That’s when Sumant interrupted me and said ‘hey – that sounds even more exciting’!!!

    To me, this impromptu exchange of words powerfully captured the concept of VENTURE CAPITAL.  It represented money controlled by the really smart and experienced investors, who gave it to buccaneers like me to do anything to find gold and treasure. In this case, my lead VC was telling me – Alok – go out there, be bold and ambitious and kick butt (and not start another mail service)!

    Go forth Entrepreneur and Venture

    Go forth Entrepreneur and Venture

    Firms like ICICI Venture, Clearstone Venture Partners, Silicon Valley Bank etc have been true-blooded VCs for me. They were not extravagant with their money, but rather understood the concept of ‘nothing ventured – nothing gained’. Leaders in these VC firms took calls on businesses that had never ever happened in the world before (contests2win) and on entrepreneurs who had come out from the deep freeze (Imagine funding me – a guy who made socks and had a crazy out idea to do online contests). Only a real venture capitalist could take that call – and these are the folks who will lead the race till kingdom come.

    The real VCs have been written about all over the place. Research them and go to them before you go to any one else.

    VC = Vapor Capital.

    The first thing that comes to my mind when I think of ‘vapor’ is impermanence. I think of steam exiting a pressure cooker, or the mist of a sauna – the vapor is very effective for the purpose it was used for and then quickly disappears.

    Vapor Capital is exactly like this. In 2003, Siemens Mobile Acceleration Fund in China invested in Mobile2win China just because Siemens had a mobile handset business and they needed VAS companies to develop original apps for their phones (eeks – imagine a Siemens App Store). At that time no one would consider being an OEM for Siemens. Their equity investment in us was a bribe to push us make games & apps for them!

    When the Siemens handset business collapsed around 2005 and the division was sold off to BenQ, then all of a sudden like Vapor, their interest in mobile2win vanished. There was no support in the business from their side nor any co-operation coming forth. To add to the punishment, Siemens put out a SELL mandate on our business hence preventing it from getting subsequent funding.

    I have gone on record and still maintain that it’s better for an entrepreneur to twiddle her thumbs than start an enterprise that needs to be financed by Vapor quality of Capital. The heartache of seeing your blood and sweat infused business decapitated is not a situation for the faint hearted.

    On a similar note, eVentures – the very first VC who funded contests2win in 2000 went bust just 9 months after investing in us. As an entrepreneur who had very recently broken out his shell and had just started waddling around, it was ghastly to see his parent dead on the sidewalk!

    Entrepreneurs must research so-called ‘strategic’ investors deeply – not who they are  (they are typically famous) but WHY are they interested in your business and what may make them drop your business like a stone. Once you can dimension that risk, then consider next steps.

    VC = Vulture Capital.

    The Vultures come when they smell blood. So many VCs descend into a Company or even a vertical industry just when the first signs of success seem to be clear – and then they have to get in. Any which way possible.

    I remember after Clearstone India put out a term sheet to us (and hence made a massive leap of faith in funding an Online Gaming Company out of India), I had a meeting with a VC at Frangipani – (a restaurant at the Oberoi Mumbai) which coincidentally housed Clearstone on the 17th floor of the same hotel. Mr. VC asked me, “Alok, what will it take to over turn Rahul Khanna’s (Clearstone India) term sheet and replace it with ours?”

    This was classic Vulture behaviour. Let the real VCs do the hard work, sniff out deals and get to the bottom of an industry. Then the Vultures who have been sitting lazily wake up and pile on. They try and bribe their ways into deals. If you trace the crazy investments in the Travel vertical in India after Make My Trip began to smell of success, you will notice the same vulture behaviour.

    Vultures are lazy and unproductive.

    Vultures are lazy. They feed on dead carcasses. They can never be leading and batting for you.

    Look at your term sheets carefully and figure out who is genuinely taking a bet on you and who is just circling above you (the prey). Your choice of deciding which VC to go with will then become very easy.

    VC = Vampire Capital.

    The meanest kind of VCs you will ever meet. My encounters with Vampire Capitalists have been in the following scenarios:

    In one case, a VC conspired to oust me (who had become a non executive founder) and got the operating management teams to take over the business. The VC convinced my team and even my fellow investors that I was not needed and preceded to force me out of the Company (drag out) by bribing me with millions. Their thinking was I was still being thrown out for cheap. Unfortunately for them, the Company collapsed just 2 years after the drag out happened that.

    Watch out for Vampires

    In the second case, other cases, a Vampire Capitalist had a set of poorly performing portfolio companies, which they tried to force into one-mega internal merger. Specifically, in the case of Mobile2win China, Softbank (the Series A investor) was not very happy with the way the business was operating. However, they realized how precious our universal short code in China was (considering that only Nokia had a similar code). Softbank had investments in other VAS companies that were doing very well in China and these companies could have leveraged the Single Short Code brilliantly. Routinely, our Softbank board member would make weird suggestions of merging mobile2win into their other unlisted companies for ‘synergy’ etc. They never offered structuring a simple revenue share between Companies or a complete buy out of our Code (which would make us – the mobile2win shareholders rich). It was all thanks to Siemens (ha! The vapor contained the vampire), who always firmly said NO to such convoluted ideas. As fate would have it, the Walt Disney Group finally spotted our unique asset and platform and acquired Mobile2win in an all cash deal.

    So, the Venturers, the Vaporists, the Vultures and the Vampires – you will have the distinct pleasure and honor of meeting all of them if you tread the sacred pilgrimage called entrepreneurship. And after you have survived them all, there will be no one left to fear.

    Essential Reading – The toughest decision of my life

     

     

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