Raj's Lab

Strategy and Entrepreneurship


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How to make an idea valuable?

Ideas are not so valuable; at least that’s what most people seem to say. While ideas in their nascent form are not so valuable, at some point they turn tremendously valuable. Booking Bus Tickets online is a very common idea with almost no value, but redbus.in was tremendously valuable – Where does the difference lie?

An idea becomes valuable when we turn ideas into commercially viable and valuable products or services. Turning an idea into something that others can experience, interact, use, and benefit from, is what makes an idea valuable. The more number of people who value a product or service, the more value attributed to it. Hence it is not surprising that with demand for a product or service, the value of the company grows. This actually means that the value of the idea keeps growing with certain actions effected on it. Is that what we mean when we say – execution is more valuable than ideation? In fact both pieces are important, and putting them together is what creates value!

The entrepreneur’s job is to constantly make an idea valuable. This means, he or she has to take up a lot of ideas, and attempt connecting them to opportunities. Once there is a good “Idea to Opportunity Map” (I2O Map as called in the book), it is time to design it into a potentially viable business. The reason to turn it into a viable business is to first ensure that the product or service actually has real demand. Once the company tests the viability of the business in the marketplace, it is then important to start looking at increasing the value of the idea. The way to increase value of an idea is to look at increasing demand for the product. Good Need / Opportunity identification along with well implemented innovative solutions create the possibilities of entrepreneurial ventures. Once this is done, the one thing that can truly catalyze this possibility is good quality marketing.

Ideas by themselves in their nascent form have no value. But when ideas are transformed into products, services or solutions that people love, they instantaneously become valuable. Only innovative and entrepreneurial people can give the idea its due.

Think about it!


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Experience, not age matters in entrepreneurship

Have you ever been asked this question: What is the right age to start a company?

As a teacher and workshop leader on entrepreneurship I keep getting this question asked to me many times. Across India, this one question is asked again and again by aspiring entrepreneurs. Here is my rational to why age truly does not matter when it comes to starting up?

History is proof to the fact that people can turn entrepreneurial at any age. In fact there have been cases of extremely successful entrepreneurs who have started off as early as age 20 (Apple and Microsoft); at age 30 (Twitter and Amazon); Walmart (age 44) and McDonalds (age 53). While we can always do analysis to find which is the age that correlates most with starting up and declare a certain number, the truth is, it should discourage anyone from trying. All of the above examples are only the popular ones, to ensure people trust that age and entrepreneurship are not necessarily closely tied.

Instead there is one thing common behind all of these entrepreneurs who started the above start-ups and many more smaller companies. What is it? “Experience” If we read the biographies or interviews or books about/ on the people or companies mentioned above, it is quite interesting to know that these people constantly kept gaining experience in their areas of interest and business from an early age. They constantly gave more of their attention to the work than theoretical inputs. They spent more time gaining hands on work experience, however small, disconnected and inconsequential. This experience is really the bedrock of what makes one entrepreneurial. An experience can turn one entrepreneurial. But that experience should be sought. In seeking that experience one gives life to passion. Through the experience gained, one gains the happiness and thrill of experimentation. This leads one to become an entrepreneur.

Every entrepreneur need not start-up. But every person who is hit by quality experience can turn entrepreneurial.

So the next time you hear yourself asking this question or hear someone ask you this question – you will have one more perspective to provide. One more reason to not avoid entrepreneurship. One more reason not to avoid freedom.

Think about it!


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Start-ups must leverage market-places

For most small businesses in India, the launch of large format stores, especially ones from the big corporate houses sounded scary. In parallel when online stores started expanding their logistics and marketing, it looked like doomsday. But incidentally there has been some revival in hopes!

While large format stores are able to give cost benefits to customers, they are not able to match the customer intimacy of a corner store. I am sure this applies to a lot more small businesses than ‘kirana stores’. Hence this threat has, in reality, turned out to be a lot less threatening than expected.

On the other hand, the online stores have actually enabled a lot of small businesses to expand their businesses. Everyone is surprised! Instead of a flipkart.com or amazon.in / jabong.com / ebay.in (amongst others) killing small businesses with price gains, they have actually enabled small businesses reach more number of customers. Unless you are one of those small businesses which is still outsmarting the customers who are unaware of cost differentials or are information starved, all others are actually benefitting from this trend. If you are one of those who is still exploiting your customer simply because of information challenges, then you deserve the onslaught from good quality competitors. For all others who truly add value to customers in some fashion, the online market places seem to be a boon.

You can now see reports of how small businesses are gaining because of their listing on the above mentioned online stores. It is also interesting to note that the above stores especially flipkart.com and Amazon.in are aggressively trying to bring on board a lot of small businesses. Read a sample news on this: http://economictimes.indiatimes.com/industry/services/retail/small-vendors-net-big-gains-as-e-tailers-spread-wings/articleshow/37491429.cms

As a start-up are you trying to still duplicate the above businesses and fight them or are you leveraging them enough? Building it is useless, unless you have a very clear reason to do it!

As a digital start-up are you leveraging the market-places available to you? Why build something that is already available for a variable fee?

Think about it!


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Budget 2014 and Start-ups

It looks like the current Finance minister likes the word “start-up” more than any finance minister of the past! Otherwise why will he make reference to it so many times during the Budget speech 2014! We can boldly say that the government is definitely seeing the start-up community, the MSME’s in India as a powerful contributor of socio-economic development. There are many interesting things that the Finance minister mentioned in his talk, here are some of the key items of interest to the entrepreneurial folk:

  • A 10,000 Crore Fund for fuelling entrepreneurship in the country. This fund should find itself being distributed as equity, soft loans, etc
  • Strengthening the nation wide network of incubators and accelerators: This should go a long way in improving the early stage support that entrepreneurs badly require
  • A 100 Crore Fund for encouraging entrepreneurship in our villages called the Village Start-up Fund: This is absolutely needed if we don’t want our cities to break down. It is also important for us to tap into the real potential of India. Rural Entrepreneurship is an absolute must in a country like India.
  • A 200 Crore additional funding for supporting entrepreneurship among the SC/ST youth. This is an interesting way to move the backward communities out of that status.
  • A special focus on helping build the next generation of technology product companies – something that India has really fallen behind in, especially in the IT Industry. A 500 Crore Fund to support potential software product start-ups is a great boost – hopefully we should see some Google, Apple, Microsoft, Facebook, etc come out of these initiatives!

While there are many other things that could be of interest to the industry, the start-up ecosystem in the country, especially the entrepreneurial youth of this country should be cheering.

In the past, plans have been made along similar lines, but not so specifically to tap into entrepreneurship. Hence we (all those involved in Indian Entrepreneurship) are all hoping that these policies will be turned into actions and they will truly reach those who need them the most. If the government can implement this, India can truly reap the benefits of her demographic dividend!

Yes, one more thing which has got missed in the large numbers is: The plan to ease the bankruptcy framework in India. Now, if there is one thing that can truly catalyse the entrepreneurial spirit in this country, it is this. Because, if it is easy to close down a failing enterprise, people will be more open to experimentation. This can also make the long held baggage (‘social stigma of failure’) become lighter and hopefully go away.

Over all I think this budget has been very pro start-ups and I think the government has read the pulse right. The entrepreneurship and small business ecosystem in this country badly need a boost. They can create the millions of jobs that India urgently needs.

With the budget fairly interesting and forward looking, all are now eagerly waiting to see how these policies are going to be rolled out. This requires policy to be turned into actionable plans and then staffed through the right people to ensure they see the light of day.

Well begun is half done, but half done isn’t really great either! Let’s all work along to make entrepreneurship thrive amongst the youth across the country.

What do you think about Budget 2014 and Entrepreneurship? Do share your views.


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Start-ups: Dare to price this way?

While there are innumerable inputs that one can give an entrepreneur on how to price a product or service, the one piece of advice that never shows up is: asking customers how much they would pay! Sounds strange to you as a start-up? Are you wondering if it will look crazy? Do you think they will under quote and cheat you? If you are saying any of these to yourself upon answering the question, please wash your face and re-think again.

Everyone wants to practice value pricing. But the trouble is we are not sure about what ‘value’ means. Hence it gets really difficult to identify the right price. But won’t it be easy to show case your product to chosen users and seek inputs on what exactly is their benefits or perceived value? Won’t it better if you hear from the horse’s mouth, what the potential benefit is, in tangible terms? Are they saving money as you assumed or it is that they are actually saving effort? Are they buying because it is faster and more stylish or are they purchasing because it is lighter and has longer battery life? Hearing from the user about what they value can provide valuable insights to pricing product and services.

You will be surprised at how gracious customers are. While some are mean and want to break you down by negotiating hard, most people are fair and want you to continue providing the service at fair price. They understand that their vendors cannot survive without making money, and hitting them hard is not good for them too.

Asking customers what the price should be is a daring practice. May be we need to ask them about their benefits, perceptions, etc.,. rather than price directly. But in any case, they are the best people to give us indications of what the product or service should cost to them. In fact the rational that they give for pricing should be treated with great care as it will give a start-up enough information to price at the optimum level.

This practice is worth exploring simply because, most start-ups under price themselves and stay stuck at that level. They simply cannot rise out the lower gross margins with which they start. Using all other strategies does not work, once we are perceived wrong by our customers. Pricing has a tremendous effect on perception.

Try experiments in pricing and use them as potential tools for creation of buzz! How often have you found a company asking you to decide how much you want to pay?

Think about it!


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Entrepreneurs: Outsource your marketing

Entrepreneurs must learn to outsource their marketing! Does it sound ironic to you? Only, if you are expecting the same traditional answer. But having heard this repeatedly from successful entrepreneurs that have scaled, I think it is important for entrepreneurs to outsource their marketing, but to whom? “Customers”

Customers are a start-up’s biggest marketing people. If your initial customers are not excited about your product or service, how do you expect to make the next set feel it? If we keep harping that our product is exciting, filled with passion, deserves to be spoken, etc.,. no one really does. On the contrary, a random blog or review can show up on Digg and become a spoken about topic. It can give you inbound links, raise your appearance on Google organic search, and lead to tremendous traffic which even your paid search cannot assure. How to become that sensation in marketing? Simply by outsourcing your marketing to your customers. How does a start-up outsource its marketing to customers? By delighting them from the word ‘go’. Right from the start, every potential customers (at least the first 1000) must simply be bowled over by your interactions, messages, communiques, products, packaging, engagement, everything! Everything about the start-up must be filled with enthusiasm, delight, energy and possibilities. All of this are ideal ingredients for word-of-mouth. Buzz happens, its rarely created. While buzz can be catalysed, enabled, supported, etc.,. it simply must not be forced. It won’t last. And if it has to happen organically, then the only option is to allow it to be handled by your customers.

As an entrepreneur, you and your team must simply break loose all the boundaries between you and your customers. Make them experience the thrill of buying from a start-up and let them share whatever they have to. Good, moderate, bad, all reviews are potential messages for word of mouth. Simply accept, acknowledge, correct, update and get better with what customers say – they kind of keep giving you feedback and hints about how to make your marketing effective and larger than what you can ever afford.

Great businesses are invariably marketed by customers. Numerous local businesses thrive on local fans spreading word of mouth in local networks and making people visit the enterprises. If small businesses have thrived for decades on local word of mouth, why can’t start-ups thrive on word of mouth, especially with the power of social media.

Think about it!


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Why VC industry will grow in India?

I think the VC market in India is poised to grow leaps and bounds – simply because of the immense opportunity to invest in entrepreneurs as an asset class. Here are some trends which should provide some support to this argument:

  • There is a lot of wealth generated amongst people in recent times
  • People with a fair amount of capital invested in safe asset categories want to explore riskier segments with limited funds (both for thrill and returns)
  • Traditional investment options are really tapering off (need more creativity from financial institutions here)
  • The first generation of entrepreneurs (post liberalisation) are cashing in on their investments and ventures

Of all the people who are turning towards venture investing, the first generation entrepreneurs who have cashed out seem the best. They have been there, done that, know the nuances of not having money, have experienced the difficulties of raising capital, can quickly identify opportunities, can spot entrepreneurial talent, and can take risk. Since this number is growing, there is tremendous hope that the VC market in all its forms (angel, seed, early stage, etc) will bloom. Its good for them too!

What do you think?


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Angels and Entrepreneurship

Who are angels? No! I am not referring to the ones who used to dance behind our couples during song sequences of movies. I am referring to people who suddenly crop up in the lives of entrepreneurs and light up their futures. Angels are people who true to their appellation spark up the aspiring entrepreneurs with money (primarily). They also provide numerous other benefits such as connections, mentoring, advice, and suggestions. For all of this, entrepreneurs need to find angels or should I say angels should find entrepreneurs! In today’s fiercely crowded and competitive market, gaining the attention of angels is really difficult. Hence entrepreneurs need to really communicate their stories effectively to reach potential investors.

The angel market is also flooded with people who have extra money. While the intention to use start-ups as an asset class seems fine, they are not really prepared or informed to make investments correctly. Most angels seek some form of security or want to make very small investments for fairly large stakes. Some angels almost want to hedge their investments in these start-ups. The whole spirit of angel investments was to make enable people before they are proven and support them in the hope that they will make it big. But that requires a lot more understanding of the nature of start-ups, about characteristics of entrepreneurs, how to deal with these investments, how to decide which ones to invest in, how much to invest, etc.,.

Angels need more education unless they come from an entrepreneurial background. I have spoken to some angels who have worked with larger investment funds, venture capital funds, etc and then made it out on their own. Such people definitely know their trade and are able to make a dent, but we need a lot more of the angels. Considering a country like India, and the talent pool that she is growing in her schools and colleges, it is absolutely necessary that we have a much larger pool of angels (not only for entrepreneurs) across disciplines. These people can identify talent, goad them into start-up or taking risks and supporting them through the process.

India needs a lot more start-ups and small businesses, so that we can create enough jobs for the many millions who will join the workforce in the coming decades. But for these we need a lot more people starting up. And for these we need a lot more ecosystem players, amongst which the angels seem an important player.

Think about it!


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Startups must not do this on Facebook

I am sure there are many things start-ups can do on FB, but I want to focus on things that start-ups should not do on the popular social medium.  Create communities around the brand / product: It is one of the first blunders that start-ups do! Who becomes your fan by pressing the ‘like’ button? Invariably it starts with friends, classmates, ex-colleagues, etc.,. But it really does not reach people who matter, especially the early adopters and enthusiasts. Why? Because they don’t know you exist and secondly, they are more interested in the cause, rather than you or your start-up. Smart social media activities should involve creating and owning causes – they will lend credibility to the start-up. You will soon be recognised as a player in the space. Why creating communities around products or companies or brands never works? It is because a brand is something that is recognition in hindsight. The earliest adopters of a product or service just join in because of the passion for the cause or the design or the entrepreneur’s passion or the domain – something that is shared between them and the start-up. Over a period of time, the start-up / brand becomes a recognised name and then is the time to move into creating communities around brands. Even at that stage, it is better and more effective to create communities around causes / passions! If large groups of users want to become fans of your product or start-up, all you need to provide is only ‘support’ to run fan-clubs. Most ‘fan clubs’ run on their own and are managed by fans – so allow it to happen that way. Please don’t spend too much time trying to add people to your FB Page somehow – it is better done in a focussed manner by concentrating on the cause / passion that you are trying to tap into. Focus: First belong to some community and then own a niche within it. Think about it!


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Entrepreneurs: tautologise, if it’s your style

In a recent conversation on Linkedin, one of my teachers told me about a phrase that seemed to tautologise – which basically means: the saying of the same thing twice over in different words. He then went on to say that it’s this style of mine that makes my writing so infectious, even though it was an error in style. While I know it seems like I am blowing my own trumpet (which I don’t like at all) – the reason why I am referring to this is because there is a lesson for entrepreneurs here.

If you are a start-up and constantly wondering why your marketing is not really working – think again! The problem might be that people are not really catching on to your enthusiasm, people are not really catching on to your passion, people are not really catching on to your entrepreneurism. Why? Is it because you are not being yourself? Are you speaking in your own style? Or Are you trying to be what your customers want you to be? Or Are you (even worse) trying to do what most of your successful competitors trying to do? If you are doing any of these, please try to become who you are – talk like who you are – speak from your heart – the world will understand. In fact ‘tautology’ is an error in style – but please understand that it can be turned into a strength and people will be willing to ignore the petty error for the bigger message. Trust your customers, your well wishers, your markets, they can see through the genuineness!

Passion requires you to move to the edge. It requires you to be your own self both in person and in communication. Take your chances (in the right places and moments), for they are those occasions when your passion lights up the place. Your marketing is a brilliant place to give life to your passion. It is a brilliant place to share your passion with others. Your marketing can make people want to follow you. Your marketing can make people want to talk about you. Your marketing can make people feel great by associating with you and your product / service. Only then can you truly add value to others’ lives!

What are you waiting for? Go ahead and change your marketing NOW! The way you would do it if you are simply you. Let people find errors. Let people criticise you. Let people criticise your style or your message. Be bold. Be courageous. The world needs every one of us, in our own way.

Even if it means I tautologise, I do it at times when I simply surrender to my inspiration. It flows through me. I focus on conveying my point. Everything else happens by itself.

The world needs a lot more courageous marketing amongst start-ups. Are you game? Then move out of your comfort zone and get started.

Now!

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