Path to Scale

Every entrepreneur dreams of creating something scalable. Leaving behind a legacy which people look back in wonder and say … how did they achieve this.

What do we mean by Scale?

Scale could mean multiple things for different people. The CFO would look at scale and say more profits, the Head BD would say more clients, the Head Sales would say more revenues, the Founder would say more valuation, the HR would say more people!

At 13 Llama Studio, when we started the firm, it was just three people and we literally started in a garage. For us scale means all those terms combined, and in the past two years we have trebled our team, our sales and our clients.

I would not say that we have scaled up so far. In the past two years, we have faced a fair bit of challenges. I am pretty certain that most start-ups go through this issues, and only the ones who are able to solve these are able to become larger entities.

Focus has to shift from People to Process

When a firm is small and is largely dependent on the founding team, it relies on the heroics of that team to do things. Folks in IT would know this a SEI CMM Level I.

As the firm grows, the number of tasks the founding team gets to spend on actual delivery versus running an organization slowly goes down. For example, when we started 13 Llama, I used to spend 80-90% of my time on implementation … these days its not even 40%.

That also means that somehow the founding team has to shift their capabilities into the organization … the people they hire. It’s expected that this rung of employees would not be as driven as the founding team, but that’s the rule of the game.

Now, the founding team has to focus on setting up processes via which a team reporting to them would be able to deliver on similar lines. A team which may or may not have the same passion as the founding team. Now, we are not looking at individual heroics any more … we are worried about the sanctity of the business process.

Eventually as these processes become well defined, there would also be a need to automate some of them so that the people running these processes could do a lot more.

Along People come People problems

I am a people person. I am, believe me. However, the minute you start hiring folks, the issue you face with this new found pool of talent is to train them, ensure that your organizational culture remains intact and the values that you espouse are transferred to them. Even if you manage to do all of that, you still have to worry about retaining them!

As a growing organization, one of the departments that would be working full time would be the Human Resources (HR); for the need to attract and retain the top folks would never stop. However, if you somehow manage to automate your processes (look at Uber for eg), then a lot of tech can replace a lot of people.

The Uber way

I deliberately gave the Uber example. These days everybody is thinking about the Uber of model. By this I mean that folks are now trying to think through the entire process to automate as opposed to first figuring out which is the best process and then implementing the same.

Uber did not immediately have this process automation. They took their time getting there … then they scaled up across multiple geographies. What Uber really did for folks in India, was to shake up the core beliefs that to grow, one needs to hire more and more people.

The IT Sector

Take the Indian IT Sector for example. I am pretty certain that we at 13 Llama Studio do not identify ourselves as an IT Services providers. However, at times we have to do development and a lot of times people whom we speak to often use the mental model of asking how many employees do we have to measure the scale of the firm.

A recent economic survey by Delloite revealed that the per capita productivity (annual) of the average Indian employee is 4000 USD (2.5 Lakh INR). As compared to China (at 17500 USD) its less, but as compared to Canada (105,000 USD) it’s a pittance.

Technology is meant to increase productivity, can’t we focus purely on increasing this than the number of warm bodies working for an organization? Yes, this is a term that is actually used.

That’s what Scale should be … doing more.

PS – If you would like to find more about this, be sure to take a look at some of the opportunities at 13 Llama Studio.

Internet Marketing and Your Business

If you own a business, you may or may not know a lot about internet marketing. Internet marketing is an extremely important part of growing your business these days, yet too many business owners don’t realise how important. They think that by handing out a few business cards, they can grow their business and make more money. I’m afraid not! Read on to learn more about internet marketing and your business!

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Rise of the App Economy

As a technical architect and a start-up enthusiast, part of my work is consulting organizations on how to go about implementing and monetizing their ideas. The past decade’s experience of working in this field, as well as having successfully built the product and development teams of two start-ups (which secured VC fundings) ensures that a lot of people are willing to share their ideas so that I can advise them on the implementation.

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Entrepreneurs in 2012

With the year 2012 coming to an end, I have been thinking for quite some time about entrepreneurship now. In fact, currently I am thinking about bootstrapping my own setup with a friend. Having said that, it is interesting to note how entrepreneurship has changed its face in the society.

There used to be a time when having a government job would automatically include you in the elite of the society. Every family would aspire to raise their son to have a government job. To know that you are going to be having your own business would mean years of hardship and minimal chances of making it big ahead.

However, as the License Raj has come to an end and the government has slowly liberalized over the past decades, entrepreneurship has changed over a new leaf. It has started becoming synonymous with capitalism and everyone who goes to the IITs or IIMs dreams of starting their own firm and making it big one day. I share that dream – a dream which I hope to make real some day.

The infographic below shows how entrepreneurship was in the year 2012. Almost half of the entrepreneurs who had managed to survive and scale into becoming SMEs are optimistic about the year ahead. Yes, 2013 is going to be a good year.

DNA-infographic

But being optimistic does not mean taking inadvertent risks. It means being prepared … being prepared for the good, and being prepared for the bad as well. Yes, it means insuring against the bad, and thinking along the lines of business insurance.

The thing about start-ups is that many firms do not realize the sheer amount of business risks they face day-in day-out. All these risks are called as operational risks. The risk we face in day to day operations. It could be a simple thing such as forgetting to file the taxes, or neglecting to buy the software license of some critical software that you require. In India, start-ups do tend to cut corners … not to make the quick buck, but to avoid the load of paperwork that comes with it. I am sure that would be the case in other countries as well.

Take a look at this infographic I found through Hiscox Business Insurance. It was here that I learnt about the myriad of business risks. Now the question is, why entrepreneurship is the road to success? Well, take a look at the top internet billionaires list. Almost all of them have touched their first million in the past to years, and their first billion in the past 5. That clearly displays the power of a good idea can launch a start-up to stardom.

These things cannot happen without proper preparations. Take a look at the top 4 billionaires on that list, 3 of them work for Google, one is the CEO (the man with the plan), the two others are the founders. A good idea will attract funds, yes … but a good idea requires excellent execution skills and proper risk mitigation tactics to avert calamities. So entrepreneurs, dream big and prepare for the worst!!

Start-up? Head to Bangalore

If you are forming a start-up or planning to start one, then Bangalore is one of the best places where you can set this up. A simple search for jobs in bangalore will give you a huge listing of career opportunities in this city. Bangalore is definitely a contender for being the Silicon Valley of India.

What makes this city such an attractive spot for start-ups?

  • Perfectly located: Bangalore is easily reachable by air, road, rail and water. So cargo freight companies have their major offices in this city. The recent upgrade of the airport also has scaled up the air traffic capacity of the city. Visitors of the city who have been travelling in Bangalore for the past decade would know what I am talking about.
  • IT Hub: Bangalore is one of the first IT mega cities in the country. What this means is better infrastructure as compared to the other cities, a tolerant government and a nurturing ecosystem of good quality labour. Even today, it is still known that to setup a tech-based startup, you need to be in Bangalore
  • Follow the Money: A lot (and I mean A LOT) of Venture capital Firms are based in Bangalore. Firms such as Accel, Sequoia, Argonaut, DFJ are all based out of Bangalore and generally try to see whether the organization they are investing in can shift their bases to this city.
  • Awesome Weather: Throughout the year there’s only one cool temperature in this city. It amazes me as to how this can be, but there you have it.

Obviously, with such great pros there have to be a few cons (the traffic being amongst the main ones there!). Hey, its not Valhalla that we are talking about right? A lot of great tech-based startups are here … Flipkart, Myntra to name a few.

So, forget other places such as Mumbai (too expensive), or Hyderabad (no good programmers). Head on to Bangalore and setup a base there!

Why VC funding is important to SaaS industry

imageIf you have worked in a start-up and have been a part of the core team in any start-up, you would be familiar with and know the importance of venture capital; and their steep terms and targets :-)

If you want a higher funding in the next round, give me more revenues.

How many of us have heard this line? In fact, it’s interesting to note that VC’s are not looking at higher bottomline, they are looking at increasing the topline. I am not complaining, it is a good perspective to hold if you want to keep an eye on the big picture.

This stand is also helping the slew of applications which are being launched as Softwares-as-a-Service (SaaS). Why? Read on.

As a business owner, one of the major targets dictated by a VC would be revenue targets. Not profitability. So I, as a business owner, will be willing to try out different new services in order to increase my offering. If a service exists which otherwise will take me ages to build or acquire, I am now more than willing to try it out on a month-on-month basis.

The overall cost of a SaaS pricing would be more, but the brunt of it on a monthly basis would be less. This impacts my profitability, but these days I am not looking at profits as much as I am looking at revenues. If I able to increase the reach or richness of my service offering using SaaS, then so be it. I will go ahead for the same at the cost of profitability.

Your thoughts?

Batch of 2005

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The world of business talks fondly of the batch of 1989 from the Indian Institute of Management Ahmedabad. This is due to the fact that a lot of participants in this class turned towards entrepreneurship and launched successful ventures of their own. The likes of Sanjeev Bhikchandani of Naukri.com, Rashesh Shah of Edelweiss Capital and many more.

Yesterday I was talking to some of my seniors, and suddenly there has been a tipping point in almost 30% of their careers. These 30% have left their well paying cushy jobs and started on the road to entrepreneurship. Some of them have already made a name for themselves, some of them are in the making.

I wish them all the best and hope that the batch of 2005, IIM-I is someday as famous (if not more) as the batch of 1989, IIM-A!