GET SET STARTUP: PART 2 – GETTING STARTED
Once you have a team in place, you start discussing your idea round the clock, everyone comes up with their path of executing it in the best possible form
“The way to get started is to quit talking and begin doing.”
Once you have a team in place, you start discussing your idea round the clock, everyone comes up with their path of executing it in the best possible form, but it requires a lot of courage crossing the threshold to quit talking and begin doing, it’s a humungous effort.
But first, you need to place a lot of things right before setting the sails on for the adventurous voyage ahead. You are all set to leave your job, once you stop obeying your boss the monthly credit to your bank account ceases.
You are still required to pay your rents; pay for your food, grocery won’t come free for entrepreneurs, and you need to party as well. An entrepreneur may not be earning when he has just started off but he spends for sure.
In order to keep your expenses on track, you need to borrow from friends or from your parents. But I think it’s a very bad idea doing so, the pressure of loan will hinder your free-thinking.
To avoid this some people do their startup on a part-time basis. They go to the office, perform their usual duties and then spare out some time to contribute to the growth of their startup.
These startups are generally fictitious; almost all of them are never launched. So to become an entrepreneur first you become an employee. You work for years and you save money to support your entrepreneurial journey.
You not only save money, but you also gain the necessary experience to help yourself run your own venture. It is not very advisable to start a venture as a fresher out of your college.
Make a guess on how many months you will require to build a product that you can pitch to people and raise money for your venture. You may be lacking a basis for your prediction but wild predictions are often the cornerstones of successful startups.
Now calculate what is your minimum sustenance for a month? All necessities covered, remember you can’t go with zero recreation as it will hamper your productivity and creativity.
Double the number of months you assumed and multiply with your minimum sustenance. This is the amount you need to save before you start your venture. You can never be creative or productive with nothing in your pockets, always remember no army ever fought on an empty stomach.
WHAT IS A MUST FOR A STARTUP IDEA TO BE SUCCESSFUL
For any startup idea to become a successful venture, part-timers are strictly prohibited. Try to think that there are people working on the same idea, they are sweating hard dedicatedly.
However intelligent or efficient you may be, you can’t compensate for the number of hours they are putting in. Being a part-timer is a sure recipe for failure.
Moreover, if all the partners are moonlighting then it’s a fictitious startup and if one of them is doing it with his job intact then sooner or later a misunderstanding of mitigating risk will arise.
Similar is the case of a long-distance partnership, understand that you can’t run a partnership by residing at two different geographies. You need to sit down together to troubleshoot on problems on a daily basis, you need to support each other out of slippery floors, so if you want to run a venture, generate some savings out of your current job, leave your job and move to common favourable geography.
Deciding your location is also a key to your success, you must choose your region wisely. First and foremost is the availability of your client, even if your product is served totally online choose a location from where you believe to acquire a good quantum of users.
It will not only help you better penetrate your product but also help you get live feedback on yourinitial releases. The second parameter is the availability of employees; you will certainly require a good number of skilled employees to scale your business.
You must go for a location where there is already a flow of skilled resources you require. The third is the cost of operation, cost of operation should be low if possible. Lower the cost of operation, longer is the runway your startup has to take off.
Now that you have an idea to change the world and a cofounder to support you through the harsh struggle, all of you have decided from where you want to start your venture and have enough money to provide your startup with a comfortable runway, there are a still few things remaining before you press the start button.
More than 62% of startups die their early death due to cofounder conflicts, all of them once started off with the best people on board but conflicts are sure to happen.
Differences occur due to various reasons, “My idea is better than your idea.”, “I work harder than you do.”, “I am the one doing all the sacrifices.”, “I don’t want to do this dirty work.”
To avoid such circumstances, you need to decide on the responsibilities on the very first day. In any startup, there are two kinds of works to do. One is specialist work; you need an expert to perform those duties like programming or sales etc. there is no escape from performing these duties with excellence.
This is the basis of you founding the startup.
Second kinds of responsibilities are common responsibilities, which none of you is an expert at, like accounting, bill payments, legal paper works etc. Both are equally important and you must decide and assign a person responsible for every work.
You may shadow each other to perform specific duties at times, but there must be a person responsible for every duty to be performed. Dividing responsibilities and trusting on your partners will keep your head lighter and agile for your share of the work assigned.
Next is deciding on the CEO position; people generally avoid this one and move on to decide it later. By procrastinating it once you will face it on every deadlock that will come.
Try and understand that CEO is not the dictator of your startup; all the decisions are taken up by the board which consists of all of you but there must be someone to make a decision and take responsibility in case of a deadlock.
Deadlocks massacre your rate of execution and if you lose time someone will kill your venture. Remember CEOs change with time and maybe after your startup grows big, none of you will be CEO.
Choosing a captain is important don’t take pride in being a CEO and choose the best one fit for the job to execute it. If you have someone who has worked for a venture capitalist or has close connections, then you are lucky to go for him. He can help you raise funds and fundraisingmeetings are CEO’s one of many prime responsibilities.
You can also go for a person who is good on stage, understands your startup well thus can speak for hours explaining the vision statement. He may be a cross-functional person who can be plugged into any part of the whole system.
CEO must be a person who can take sensible decisions fast and with confidence also can face the consequences, good or bad.
Many times best of players are not good captains, so don’t go for the best contributor but for the best leader.
One more discussion which people generally procrastinate is the equity division, people assume that no one is greedy among them and everything will go fine. But nothing goesfine, even the slightest dissatisfaction takes monstrous shape when differences creep in.
You must have a round table discussion and you must come to a number which everyone agrees to, also it is necessary for everyone to get every doubt cleared. People should not agree only to avoid the dirty discussion, they should agree on each and every term with proper reasoning.
Everyone must understand the monetary value, the efforts and the risk each one is undertaking, old friendship, love or respect should never affect the decision on the numbers.
A lot of first-time entrepreneurs avoid the discussion and settle at 50:50 or 33:33:34 per cent, but it’s not advisable and should always be avoided. If you tend to avoid discussionswith your cofounders, then you have not chosen the right team.
For a very long period of time you will have to get into hot and harsh discussions with each other so don’t shy now, get into a healthy discussion, learn to convince people and come up with numbers which everyone holds upright.
Think whether every one of you contributing equally on every front? Do all of you have equal market potential? Are you or any other cofounder making some monetary or other financial contribution? Answer these questions very carefully and compensate for every effort of everyindividual, this will generate mutual trust and satisfaction.
When Sanjeev Bikhchandani, the internet visionary of India wanted to launch his first website, he required a server. Those days the internet was in its nascent stage and a complete stranger for Indians. Setting up a server to host your website was near to impossible.
Sanjeev had gone to an IT exhibition at Pragati Maidan where he was introduced to the internet for the first time. It was a VSNL stall selling email services. Sanjeev was notinterested in an email service but he was keen enough to launch his first version of naukari.com.
He had no clue how to set it up so he called his brother who was a professor at UCLA. He told him about his idea of launching a website and he needed a server for the same and all servers were in the US then.
Also, he had no money to run the server. His big brother not only helped him set it up but also paid for it. It was 1996 and a shared server use to cost $25 per month.
In return of his efforts, Sanjeev gave his brother 5% of the total stock of his company. His brother never asked for it but he did what was just. Every entrepreneur must recognise even the smallest effort and pay for it at the very beginning.
Try compensating every effort made or penny spent by each cofounder weird numbers may come on the table but those will be the true numbers and at the end, it will further strengthen your relationships and mutual trust.
Also, have discussions on cofounder’s salaries, if not the exact salaries, that may depend on the amount of fund you raise, but a range or a ballpark figure must be decidedbeforehand.
It will set the right expectation for everyone, also an economic condition of all the cofounder may not be the same so it is very important to decide the financial benefitsbeforehand.
Startup journeys are full of valleys, cliffs and cusps, things may go into realms neither you nor your cofounder can ever think of. It may happen that any of you become a liability on the company or may decide to part your ways.
These circumstances may not be willing; sometimes you are forced to take steps that you don’t like, so you should incorporate a provision for a quitting cofounder or for forcing a cofounder to quit, with this we come to a very important document that is called cofounder’s agreement.
A cofounder’s agreement is a written and signed document among cofounders which defines the rights of cofounders. Cofounder’s agreement elaborates the roles and responsibilities of every individual, failing on which clauses can even force an individual to quit if the board decides.
It also explains equity ownership and vesting. It is very important to understand that whatever percentage of equity you decided on is not vested on the very first day. Each co-founder earns his equity by working for the company.
The vesting period is decided by the cofounders.
This will help the company in an adverse situation of a leaving cofounder. The leaving cofounder will only have equity vested for the period he actually worked for and not the initially decided number. This is fair for both parties.
A cofounder’s agreement should also contain clauses about intellectual property. When you and your cofounders work together on a venture, you come up with brilliant innovative ideas and processes, those ideas constitute IP, see to it that these IPs belong to the company and not to individuals.
It is very important if you want your company to generate value in long run. Try to create a very lucid cofounder’s agreement defining all the right of a cofounder in all situations, you must also take care of IP rights. Taking help from an expert is highly recommended.
Now that you have a once in a lifetime the idea, you got your right cofounders, you decided on the place to startup, also split the equity well and signed a properly drafted cofounder’s agreement, you are ready to start working.
Every thing starts with planning. You must plan your initial journey to minute details.
You need to set week on week goals for each team. While the development team is working on its first prototype, the marketing team should come back with market research on the raw idea. Both the teams should have their own time-bound goals, no one sits idle in any startup.
Plan for every event that will add up to the success of your venture. Keep a track on the execution of the same. Set strict deadlines for each stage of product development and market research.
Strict deadlines always compel us to innovate and execute to meet them. So not only decide your sequence of steps to success but also decide time frames for each move.
Competition is also one thing you should always be wary of. An early analysis of competition will not only prepare you but also, there is a lot to learn from your competition.
Initially, you may think that you are ruling on a virgin territory but a close analysis will show you, disguised competitors. A mobile phone is nowhere similar to a wristwatch, whether it is shape, size, function or utility.
When you observe it closely you find that mobile phones have breached territories and actually eaten up the market share of wristwatches. A similar competition can be seen these days between smartphones and point-shoot cameras.
So look for your competitions well and get prepared.
Once you have started up, don’t be afraid of failures. They are sure to come. Thomas Edison was experimenting on his electric bulb.
He tried various kinds of filament but failed every time. Every time he started again with the same enthusiasm. Once someone asked him if he is not tired of failing, he said he never failed.
By trying each filament, he was successfully discovering materials of which a bulb can’t be made. You will fail a great number of times to finally succeed once and that success you will cherish for your lifetime and maybe your story will be shared with generations to come.