Archive for the Entrepreneurship Category

Will Color Be Bigger Than Google or Facebook?

Posted in Data mining, Entrepreneurship, Facebook, Google, Innovation, Social Media Marketing with tags , , , on April 22, 2011 by Shankar Saikia

In one’s quest to be entrepreneurial one often ponders new products and ideas. This week I started playing with an iPhone application call Color . This is a photo-sharing application like Instagram, but with a twist. Instagram enables you to take pictures with your iPhone and then share it with friends on a social network like Facebook, Twitter etc. Color is different – first of all it allows you to join a group within a certain distance of where you are physically located. Second, any pictures that you take are shared with that group. Third, and I have not tried this part yet, you can receive messages from group members! It’s a strange application, primarily because it is so different from social networks that we know – Facebook, Twitter etc. In a conventional social network, you join a network. In Color you join a group without joining a social network. Still don’t get it? Me too 😉

Two weeks ago Silicon Valley and by extension the tech world, was abuzz about Color – one reason, and probably the main reason, being that venture capitalists injected $41 million into a series A round into the company. Once I heard about the investment I became curious, downloaded the app and started experimenting. Then I read that the $41 million is part of the quest for “the new Facebook”. I can see why the search for the new Facebook has begun. It appears that Google is having problems, Twitter is having challenges and Facebook is highly valued – so, no time like the present to search for the next big thing. After all, this is Silicon Valley where tech innovation never stops.

While I certainly do not fully comprehend everything about the Color app, I admire the thinking outside-the-box of the founders. In some ways, Facebook is becoming predictable and boring. Maybe now is the time to “friend” someone you do not know, as long as she or he is physically near you – wow! how cool would that be?? That’s just one aspect of Color. There are other angles such as data mining – for example, how does a person behave when in a certain group? Well, just study the data gathered from that person’s interactions in that group…

These are exciting times in this age of mobile, social and cloud!

Any outside-the-box ideas that you are pondering?

Social and mobile and cloud – where enterprise applications are going

Posted in Enterprise applications software, Entrepreneurship, Innovation, Venture Capital on March 26, 2011 by Shankar Saikia

There is a new world order in Silicon Valley, and by extrapolation, the world of technology.  Out are Oracle, SAP, Microsoft and in are Facebook, Zynga, Groupon. The question is: if I am in the enterprise applications space what is the next big thing after Salesforce.com ?

I see three areas of innovation:

(1) Social: with everyone jumping on the Facebook bandwagon, there will be a way to make applications more social. How is this going to happen? I don’t know but I can guess the following

– your work will include more and easier collaboration

– traditional e-mail will disappear and be replaced by concepts such as “Like”, “Recommend” etc.

– sharing will become more common

– the boundry between employee and non-employee will disappear

(2) Mobile: this is the easy one. One will be able to do their work using just a mobile phone. So, the PC disappeared a while ago and very soon the laptop will disappear. Will it be replaced by a tablet (e.g. iPad) or a smartphone?

(3) Cloud: this is an interesting one, because I feel that we are very early in the lifycycle of cloud computing. I predict the following

– the data center as we know it will disappear

– instead you will find cloud centers!

– storage will be a hot area

– there will be a whole new category of Fedex-types of companies that “deliver anywhere” using cloud-based services

Are you ready for all this innovation? Hope you are as optimistic about these trends as I am. We will soon welcome a new class of billionaires …. you could be one of them. How exciting!

VCs Tell How They Invest (VLAB Event, January 26, ’10)

Posted in Entrepreneurship, Venture Capital, VLAB with tags , , , on January 27, 2010 by Shankar Saikia

THUNDER-LIZARDS! HEAT-SEEKING MISSLES! SEX (almost)! These were some of the topics discussed at today’s VLAB event titled “How my company leap-frogged with the help of funding partners”.

Today’s panel included the following VCs:

Howard Hartenbaum – August Capital
Josh Kopelman – First Round Capital
Mike Maples – Maples Investments
Dave Strohm – Greylock

Ravi Belani from Draper Fisher Jurvetson moderated a great session, most of which had a “hot seat” format – a few lucky attendees got to ask the panel for advice on actual VC-related scenarios.

Here are some of the nuggets from each panelist:

1. Howard Hartenbaum – August Capital

VC as partner: A relationsip with a VC is like a marriage – you will be spending a lot of time with your VCs and so get to know them well.

Beat the big : VCs like ideas that involve beating big traditional companies.

2. Josh Kopelman – First Round Capital

Don’t cross the stream together: He used an analogy from a film (Ghostbusters? ) and basically meant that during fund-raising do not tell a VC which other VCs you are talking to .. or you will get the worst possible term sheet.

Lower start-up costs/time: it takes less money to start a company and less time to test it out – both are great (e.g., $600K and 6 months now versus $6 million/6 years before).

3. Mike Maples – Maples Investments

Thunder lizards: VCs invest in companies that can take advantage of “disruptive tectonic” forces in the market and become huge – like thunder lizards (Mike’s movie choice = “Godzilla”)

Project Big: When you pitch a VC tell them how big an impact your product/service will have. For example, at Motive their opening slide said “we will cut data entry costs by $25 billion!”

4. Dave Strohm – Greylock

Alignment: VCs and entrepreneurs’ goals should be aligned and investing in common stock (without liquidation preferences etc.) is one way to align interests. He said that unfortunately most deals do not involve common stock.

Where are the women? : He asked why there weren’t more women in the VC business. Also, when Mike referred to an entrepreneur as “he”, Dave quietly admonished him and urged him to say “he or she” … But, to Mike’s credit his firm’s other partner is a woman and she sourced their best deal yet – so kudos to Mike.

Here are some of my own insights:

Grey Matter: These VCs seem soooo smart – have you checked out Ravi Belani’s profile?

Grey Hair: My own hair is greying  but I couldn’t believe how many in the crowd had more grey hair than me! My guess is that some of the grey haired folks (except for me) were angel investors. With lower capital requirements for starting tech companies (because of cloud computing, open source etc.) I think the number of VC firms is going to decline, meaning that if you want to start a company angel investors are going to be your best (and perhaps only) shot at funding.

Silicon Valley Special: The valley is truly a special place for tech innovation, especially for businesses focused on intellectual property . I doubt if any other place can compete.

My final thought: Tech is just one avenue of entrepreneurship. There are several other sectors where you can create disruptive change – health food, sports, healthcare, travel, housing …… are just a few that I can think of …

What do you think? Do you agree with the VCs or with me?

Think “Process” NOT “Software”

Posted in Business Process, Entrepreneurship, Pain versus Need on December 4, 2009 by Shankar Saikia

On Saturday evening I met a gentleman who had been attending football games at Stanford for 53 years. We started to talk about Stanford football which has always been one of my favorite topics. Later our conversation drifted to entrepreneurship and he told me a story about how he recently advised two former homeless guys that started a diaper and toilet-paper distribution company. The lesson he gave me is to “sell what the market needs” – go here for more on this fascinating story.

As someone in the enterprise applications software industry I often dream up ideas for new, innovative products. The goal is always to solve a business problem. Lately I have been interviewing business owners and asking them the following question:

“What are your two or three biggest pains”?

Here are the most popular answers:

  • CASH FLOW: having cash to run the business
  • PERSONNEL: while “personnel” is somewhat of an archaic term for human resource professionals (“human capital” seems to be the new phrase)  one business owner told me that people are important because “during bad times they will help you, during good times they will help you”
  • LEADS: one business owner told me that during good times generating leads is not as important as during bad times such as now

These answers are fascinating because, while they are challenging problems, solving them requires changing business processes. Software consultants and salespeople often like the peanut-butter strategy of answering every question with the words “yes, our software can do that” ;).  The reality is that software alone does not solve most  problems.

The next time you work on entrepreneurial ideas or are trying to sell enterprise software think of how you can solve your customer’s  problems with better business processes.

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NEW PRODUCT PRICING: Is the MARKET right?

Posted in Enterprise Software Sales, Entrepreneurship, Pricing of Technology Products, Pricing Theory on August 12, 2009 by Shankar Saikia

A key challenge that an entrepreneur, especially in the case of new and innovative products, often faces is “how do I price my product or service?” I faced this situation at two early stage companies that I worked for and at one startup where I was the cofounder.

Conventional pricing theory, which Robert Phillips explains very well in his book Pricing and Revenue Optimization, says that there are three (3) methods for setting prices:

  1. Cost-based: add a markup to the cost of production.
  2. Market-based: charge the price where supply equals demand – the final price is arrived at after the customer compares competitors’ prices
  3. Value-based: relate price to the benefit gained by the customer –  negotiate a price that is proportional to the value that the customer gains by using the product

While one can make a case for each method of pricing, my experience has proven the following related points regarding new product pricing:

– a customer will pay a price that is similar to what it pays for something that it (i.e., the customer) perceives as a substitute

– a customer will pay what it feels is the market price that in turn is constrained by a budget. For example, back in 1999  when I worked for one of the early software-as-a-service (SAAS) companies, one of our prospective customers had a $10K per month budget for application software – the price that we eventually negotiated did not exceed the $10K  per month budgetary limit.

In my 20+ years in the enterprise applications business I have noticed that, while vendors like to rave about “value-based” pricing, customers end up negotiating a market-based price. I do feel that the value-message is the right one – it’s just that customers often, and rightly, feel that it is impossible to link value to specific products. Therefore, the market-based pricing method is what actually works in the real world.

Pricing is a hot topic in several industries. Most of us are aware of yield-management in the airline industry where different classes of customers (e.g., leisure travellers that book early versus businesspeople that buy at the last minute) pay different prices. In the software industry several companies, especially those with SAAS offerings, offer “freemium” products – you can use a free version upto a certain number of users etc. In the world of web 2.0, social media and online gaming, there are challenges such as what to charge for virtual goods, how to monetize offerings (e.g., Twitter) etc.

There is a lot of debate about pricing in the world of enterprise software as well as consumer software. Recently Techcrunch published a great writeup on free pricing in enterprise software. Bill Gurley from Benchmark Capital has a nice writeup on pricing-related opinions of several notables including Malcolm Gladwell (author of Outliers, Blink (my favorite book) and Tipping Point). My perspective is that nothing of value is ever free. In the enterprise software industry, newer technologies such as cloud computing and web 2.0 collaboration are enabling vendors to provide freemium offerings – the vendor benefits by lowering the cost of pre-sales  (instead of viewing demonstrations, why not try the software for free!) as well as by getting faster product feedback (therefore lowering the cost of product management/development etc.). In my own experience as an entrepreneur I started using free versions of software until I had to upgrade because of increased users – I paid because I saw value.

Pricing is a complex topic with nuances such as price differentiation, dynamic pricing (i.e., the price changes with supply and demand) and monetization strategies (e.g, Twitter). Despite the complexities, I have seen that conventional economic principles of supply and demand still influence prices. My simple rule of pricing is to set a price that is close to that of similar products and then run it by your customer – the customer will most probably compare your price to those offered by the competition, and eventually pay what the customer feels is the right price – which is essentially the market-based price!

What do you think?

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WIP Entrepreneur’s Tips For New Entrepreneurs

Posted in Entrepreneurship, Pain versus Need on July 29, 2009 by Shankar Saikia

I call myself a WIP (work in process) Entrepreneur. I am using an analogy from the world of manufacturing, where products start as “raw material” (basic parts, nuts, bolts, components etc.) and end as “finished goods”. WIP  is the intermediate stage, similar to an unfinished automobile on the assembly line.  My entrepreneurial background includes  2 startups that I worked for and 2 that I founded. I am in the process of starting my next company and so writing this blog post is reminding me of some of the important lessons that I have learned from my prior experiences. I hope you find these valuable.

Here are some tips:

SELL WHAT MARKET WANTS: One mistake that new entrepreneurs make is trying to sell products/services that customers either do not want or do not understand. In the latter case, expensive marketing resources are needed to convince prospects about the value of your products/services. At my last company (Highlander Systems) I made the former mistake (i.e., trying to sell what the customer did not want!) until I opened my eyes/ears to what the market was looking for.
GOOD PEOPLE ARE IMPORTANT: An important tenet in the world of business is the ability to “find, acquire, develop and retain talent”. At one of my startups it was difficult to both find as well as develop talent. Once I realized that I could not develop (i.e., train, teach etc.) the available talent, either at that time or in the future, I decided to redirect my efforts.
KEEP OFFERING SIMPLE & FOCUSED: It is tempting to try to offer a little bit of everthing – some entrepreneurs use the term “end to end” solutions/products etc. The problem with this approach is that in smaller organizations customers look for specialized skills. You are more likely to acquire customers if you have a narrow focus on a few related products/services. Focus, focus, focus … it always works!
DO WHAT YOU ENJOY: I am one of those entrepreneurs that likes to “do the work.” If I have to do some or all of the work (depending on the stage of the company) I prefer to do what I enjoy – in such a situation I do not view myself as “working” … instead I am genuinely having fun. Remember that phrase: “if you do what you like you would not have to work a day in your life”.
EXPERIMENT: At my last company we started as a “sales & marketing consultancy” where we delivered sales training to companies, then we became an “advisory company” where we attempted to advise startups on business and fund-raising strategies, then we spent 8 months trying to sell enterprise software and finally reverted back to a “sales and marketing consultancy.” Why? Because we were trying to figure out what we could offer/sell to the market. We had to experiment with different offerings until we determined the right business to be in.
DO NOT DO IT JUST FOR THE MONEY: This is an important lesson for all entrepreneurs. It is natural to pursue entrepreneurship in the quest for wealth. One of my favorite billionaires, J.P. Getty, said that the best way to make money is by starting your own business. Once, when someone asked him the secret to making money, he said “…wake up early, work hard … and strike oil.” 😉 I think you can substitute “oil” with the current flavor-of-the-day.  What I enjoy most about starting and running my own business is the freedom, control and ability to fully apply my talents.  Experts say that if you do what you like you are more likely to make money. Personally, I believe that it is very difficult to make a lot of money in a short time span with minimal risk (I heard this on CNBC TV). I love what I do and whether or not I make money does not bother me .. as long as I can do the things I enjoy I will continue to be happy.
LEARN VALUE OF MONEY: My last venture (Highlander Systems) is a fully personally-bootstrapped business (i.e., I am funding it with my own money AND time.) In the last 22 months I have undergone extreme stress due to financial crunches, limited funds etc. I have learned first-hand about capital efficiency. It’s a unique feeling to see ones own hard-earned money (my own, NOT a gift from my parents or future wife or whoever … my very own 😉 ) work and not work for you. One of the most rewarding moments of my latest venture was the day I paid myself from funds that my company earned – it was just a little bit less than what Larry Ellison earns, but I was happy 🙂
KNOW WHEN TO SAY WHEN: One of my favorite beer commercials ends with this phrase – the message is to stop drinking when you know you have had too much. If you feel that you need to change direction have the courage to do so. Never worry about prestige, pride etc. You control your own destiny and nobody can take away from you what you have accomplished. You grade yourself! In my case I have always given myself an A+ (the best grade) for effort, passion, strength, composure and most importantly … personal happiness!

Good luck with your journey … if you have already started on the path of entrepreneurship then you are already successful!

What do you think? I’d love to hear from you ….

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