Speed, Trust and Belief

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The other day I was driving out of town. It took me about 45 minutes to do 15 Kms inside of Bangalore at 4 AM. There was no traffic on the road. Once I got out of the city though, I was able to drive a lot faster and covered the next 200 Kms in about 2 hours.

For those who are intimately aware of Bangalore, the roads in the city are not great. It is not that I could not have driven faster in the city, it is just that I did not trust the roads enough. As soon as I would speed up, a pothole or some undulation would appear forcing me to brake. More fundamentally, not knowing where these surprises were going to pop up meant I did not trust the road ahead. As a consequence of this I did not cross 60 Km/hr while driving within the city.

People do not like uncertainty.

To the contrary once I got onto the highway, I kept getting faster and faster. As I started driving on the highway, I was cautious for a period of time. As I noticed that the road was more predictable and no surprises were in the offing, I forgot the bad experiences within the city and sped up. I trusted the road that lay ahead of me; This trust in the highway allowed me to speed up and stick to it.

Your ability to go fast is directly proportional to your trust/belief in what you are doing.

When you are driving if you do not trust the next piece of road to be safe you will not be able to commit to speed; If you are running a business and you do not believe in what the company is doing, you would not be able to grow fast.

When you run a company trust manifests itself in the form of belief.

If you are put in a situation where you are left selling your product to someone who is ‘sitting on the wall’; your ability to sell will depend on how strongly you believe in your product. If you really think that this product is worth every penny and that it is going to make a positive change to the customer, you will sell it to the best of your ability. And most often your will succeed at it as well.

What did Steve Jobs bring to Apple? Not knowledge, not technology, he brought belief.

Your  ability to achieve what other call the impossible is greatly accentuated by your belief. This is the reason, in certain cultures, people walk on fire; they believe that they will not be harmed.

Starting a startup is hard. It is like walking on fire.

Do you believe the activities that you are pursuing with your startup is going to change peoples lives positively?

Turning a Startup into an Organisation

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I have been working with startups for a fairly long time now. The fun part of working with startups is that there is absolutely no way to anticipate what would come next. You have to be fast and nimble, constantly adjusting to the changes that are happening around you.

This is precisely what makes building a startup really challenging as well. There are those who thrive under these circumstances and then, there are those who don’t. The trouble is that as one proceeds through the life cycle of a startup, the things that are an asset at the beginning turn out to be a liability later on. Founders need to constantly adapt and change to the changing realities of their business.

Working with startups, I have come across three distinct phases of building a business. I am going to focus on product businesses since most other businesses cannot be deemed startups according to me, simply due to the challenges posed in scaling such businesses rapidly.

 

Building a Product

The first phase of embarking on a startups is to build a product. But even before you build a product you need to verify that the problem you are looking to solve is real and that the customer you are going after feels it.

 

Every business is built on the basis of a keen insight into human behaviour, businesses exploit the behaviour to make a profit.

 

The need to test the behaviour hypothesis and ensuring that it is correct is extremely important to ensure that the product does not fail once it has been developed. We have worked with startups that have used all kind of tools including whatsapp, Facebook page and groups, Pinterest, etc. to build the quick and dirty manifestations of what the product is likely to do. In certain cases, we have had startups run the product like a service before taking a dive towards developing it. Running it like a service tends to be people heavy and hence cousins, friends, siblings, etc are exploited to pitch in from time to time. Once the same can be tested with small groups of 100 to 200 people, the proof of the behaviour is surely in place.

In the case of hardware related products, prototyping the product is crucial. Thanks to the advent of crowdfunding, it is possible to gauge the demand for a product in the market fairly quickly, sometime even before the prototype is ready.

At this stage it makes sense to take the time and invest the resources necessary to build the product. If you have a founding team that is solid on the tech side, it is possible to build out versions of the product that are extremely simple and addresses 2 or 3 of the most critical features that the end product will have. Trying to get all of the features or functionality of the product into the first version is difficult and dangerous.

Apart from establishing the hypothesis, the advantage of doing the quick and dirty product is pure insight.

I tend to compare most things to mathematical equations and if you were to look at a business as a mathematical equation, there are several variables that you may know but several that you cannot even foresee when starting out. This process gives you an insight into many of the variables that you would have normally missed out on.

Building a product is hard – You need to take all of these insights and turn it into a workflow that would be well suited to the use case that you are building for. The product has to be able to accommodate all of the exceptional requirements that would arise and function intuitively.

 

Building a Business

Now that the product is done, one needs to build a business around the product.

People only spend money on something when they believe that the value that they get would be greater that the cost they must incur

Value is a belief – This is exactly the reason why some people would go and spend 1,00,000 rupees to buy a trouser at Prada and others would stand around haggling for a 1000 rupee trouser at the local market.

Building a business involves instilling the ‘belief’ that the product that you are selling is worth a lot more than the cost that they would be incurring.

 

Steve Jobs was neither a hardware guy, nor a software guy. What did he bring to the business?

Well, he brought this thing called belief.

 

Making money is all about making the other person believe that there is value in what you are looking to offer them. This comes down to two things.

Firstly, how well has the pain been understood. If you understand that pain felt by the customer well enough, you would have a clear understanding of how willing or unwilling the customer is going to be to get rid of it. The bigger the problem, the easier it is to perceive value. Secondly, how well is the solution being projected. Most luxury businesses are just projection alone.

I had written another post on the art of selling here.

Turning the product that you built into a torrent of money is challenging because this is where being fast and nimble has a huge role to play. As an entrepreneur you need to get constant feedback from the customer fine tune your product repeatedly and iteratively in order to reach the state of perfection investors like to call the ‘Product-Market Fit’.

According to me, you reach product-market fit when you have clarity of what the market requires. Most often the consequence of this understanding reflects in being able to tell the returns one can expect from investment in marketing.

‘If I spend $10 Million in marketing, we should be able to triple our user base over the next 18 months and gather a 5% share in the category that we are targeting.’ When you have ‘Product-Market Fit’, you can essentially express scaling-up in the form of an equation.

 

Building an Organisation

The final stage is to move towards organisation building. If you thought building a product and the business was hard, this is far and away the hardest.

 

A successful business is one which has a high degree of predictability of Income.

 

In a startup things tend to be rather impromptu, most of the decisions are taken in response to the market. Strategies can flip in a matter of months.

Once the company has established a market position and a certain degree of predictability has set into the business, the focus of strategy has to shift away from exploring many pint sized markets to addressing fewer barrel sized market. This involves building an organisation that can take care of certain repetitive functions. You must first of all define these functions, these revenue units, these business vertical and hand them over to appropriately talented individuals.

In my experience it is important to think about organisation building, when you pass the product stage. Thoughts on organisation building has to begin simultaneously with the process of developing the business.

What would a 100 people organisation look like?

What roles are people going to play?

What are the kinds of skill sets may be required?

Recruitment is a long and arduous process, especially in today’s world. If you find someone who is talented, make a mental note of what role you would want them to play in your business and where you would see them fitting in. Its like a game of chess where you are setting up your pieces for the right time to come along.

Some founders have a latent network available to them which is quite powerful. Some have to go out and build them. Preferably bring in people who have equally strong networks in their area.

At the end of the day any organisation is only as good as the people who are a part of it. Bringing together people who are consistently better than yourself, and nurturing them, is the best way to build an organisation.

The best organisations are ones where the job of the leadership is only to provide direction.

Belief is the most valuable currency for a startup

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If the owner of a pharmaceutical company that produces Vitamin tablets; says that he believes that Vitamin tablets are a very important source of nutrients for the body and he eats the tablets everyday.

Do you think, he really believes it?

He may or he may not, you can’t tell.

His beliefs are within him.

But do YOU really believe that it helps? Within yourself you should be able to tell for certain. No? Let us say that you do not believe what the man is saying.

I would like to bring to your attention, a recent study that indicates that over the past century the availability of vitamin tablets has increased the quality of life and helped increase life expectancy amongst individuals. In the early 1900’s, life expectancy at birth was 31 years, these alternative nutrients have increase life expectancy to 67 years. The lack of access to these medicines has meant that in parts of interior Africa, life expectancy is still close to 40 years.

Life Expectacy

Source : Wikipedia

Now what do you think?

Are you at least questioning yourself?

 

 

The study that I just quoted was made up! I connected various pieces of data to spin this story.

The truth of the matter is that no matter how strong your belief might be, that belief can be easily influenced by information that someone else offers. So our beliefs are not set in stone.

In my experience, belief often separates success from failure. Hence it is the most valuable currency that anyone can bring to a startup. More valuable than any skill or money. A strong belief makes you push and try to achieve things that others would not. This is what separates the ordinary from the extra-ordinary.

During a startup journey you will come across challenges that at first glance might seem insurmountable. If you have strong belief in what you are doing, you will find a way to make it work.

Doubt has killed more dreams than failure ever can.

I have always maintained that when Steve Jobs came back to Apple he brought this one important ingredient to Apple. He brought belief to Apple. He brought a belief that a world with Apple is better than a world without. All the great, talented and gifted people at Apple were able to rally behind that belief. Look what they have achieved.

P.S. – When I talk about belief I am referring to WHAT you seek to achieve, not HOW. The how will keep changing based on how the market responds.

Things to remember before heading down the path of Entrepreneurship

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Last week, we hosted the Startups Club meetup at Chennai. We were fortunate to be joined by Mr. J Krishnan for the meeting who shared some of the wisdom that had been shared with him by the likes of Kanwal Rekhi. I just made a note of them and put them together in this blog.

 

You are alone in this journey. During some the hardest times faced by an entrepreneur, there is invariably nobody around to fall back upon. In fact many problems are such, that even if others wished to help you, there would not be much that they would be able to do. An entrepreneur should be able to cope with the emotional needs by himself.

The only thing certain is uncertainty. One of the entrepreneurs said “Morning I am up and upbeat and evening down in the dumps”. Your promotion will not be pulled back next evening unless you do something rather questionable. Client can refuse to sign up for no apparent reason whatsoever. You should have a heart that is strong in order to be a entrepreneur.

Failure is not bad. Failure is to your credit. Just as any job experience contributes to the experience that you have gained in the period, a failed venture or a failed pitch is just contributing to your experience. Don’t make decisions with the fear of failure in mind. It is important to leave the fear aside at all times.

Execution is more important than all else. You might have the greatest idea at hand, but unless you realise what you are dreaming up, it will remain just that, an idea. It is important to make sure that you execute and do that to perfection. Getting too bogged down with vision setting and activities of the sort at the initial stages, is not going to take you far. Your product may flip 7 times before it hits the market. Have a goal in mind and execute tirelessly to reach that.

You get early insight on customer needs if you start meeting customers before your product is even finished. Customers are the best people who can help guide your product or service into a shape that they want. Gets your validation. In the process you may find your first customer.

Entrepreneur is at all points of time a salesman. You have a story which you have to be constantly telling at all times. You have to live the business that you are looking to build each moment. You are the biggest asset that your company has got and the work that you put in initially is what is going to reflect in terms of value when you go in to raise money.

Belief is needed in order to get converts. Three beliefs that are essential for an entrepreneur. Belief in yourself, belief in your company and belief in the product or service which you are building.