Posted by: alok | December 21, 2006

Nuances of starting a venture

Few days back I met these guys: Brad Galle and Anil Dharni, both MBA students from MIT Sloan to discuss their AnswerU venture…! The guy Brad is a big shot, he is also the CEO of Aptegrity and Square Earth Inc. Just do a Google on his name or on his companies. I came to know about Anil through my PM in Cognizant who apparently was his classmate in Punjab Engg. College.

These two guys were in India to strategize and give more concrete shape to their venture. We couldn’t strike the chord to make things happen, as I had other commitments and they are also in touch with Amit Rajan (Uzanto), Ashish (Tekriti), IIT D and IIT Powai incubation centers, Persistence Software (in Pune) and a couple of more guys. It’s a possibility that these guys might find the necessary setup in these places, and set the ball rolling immediately, which is not the case with me, as I would need some time to do the setup, and make it operational. Either way, but it was a great experience, as I could figure out their key concerns, which would be same for any startup:

1. Who is your partner: In the early stage, you are confused on how to go about managing the operations – for Anil and Brad it is – should we outsource it to established organizations ( like Persistence), work in partnership with established startups (Uzanto and Teckriti) or start from ground 0 (with guys like me).

1. If you chose first option: pure outsourcing,
i. PROS: You get the technical expertise, team office, everything upfront
ii. CONS: you loose control of the technical aspects, and anyway you need your own marketing setup (in their case, getting user community from educational insti’s in India). A established software services company won’t do this – as marketing your solution or product is not their business. They would develop a software solution for you, and that’s the end of it, how to take it to the market, whether its success or failure is not their concern.
2. If you chose second option: partnership with established startups
i. PROS & CONS similar to those of pure outsourcing, plus the cost of lost equity ownership
3. Third option: start from ground zero by setting up your own office:

i. PROS: you have lots of control in technical and operational aspects, its your team, and your company

ii. CONS: ramp-up time, and the newbie like me don’t have information of legal and tax implications and would need to hire a consultant to sort out these things

2. IP protection:
1. You have a business idea, how do you ensure someone else doesn’t copy it
2. You have developed technical IP (very-very critical for product companies) – someone leaving the company doesn’t take away your code base
3. Employee hiring and retention:
1. You don’t have the brand name so why will someone join you – even if he joins you.. what will he say to his social circle – “I am working in XYZ and not Infosys or Microsoft”
2. You need talented and bright guys in the beginning – but you can’t afford them
3. What will motivate the team – high salary – how much? if you give stocks in the company, and what if he just walks off after 2 months? Will stock option with maturity of 4-5 years work?
4. Office Setup:
1. What’s the cost of setting up the office
2. What’s the sitting capacity you shud go for? You cannot just keep on changing your location every quarter as the team size grows, and you can’t maintain teams across segregated locations, unless they are working on completely unrelated things

There would be countless other such questions. Sometimes it is very critical to ask the right question, even before seeking an answer.

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Responses

  1. Hi Nawab,

    Interesting post ….have you already ventured into entrepreneurship or thinking of taking the plunge?

    Whats up these days? I went through some of the posts on your blog – liked it!

    Chal reply back,
    Bhuwan

  2. Hey Bhu1,

    Thanks for dropping by my blog. I haven’t started any venture as of now, but these days I am interacting with few ppl who have started their ventures, and trying to understand the nuances.

    And most importantly, I don’t have any concrete thoughts on the possible avenues.

    ~Alok

  3. All the best for your venture and for exploring it.

    (Should it not be ‘Tekriti’ instead of ‘Techkriti’ which you have mentioned?)

  4. Thanks for pointing it out…. its corrected now…!

  5. Many entrepreneurs like Brad and Anil are having bright ideas but need a low risk way to take their venture to the next level where they need to have a prototype (incidentally they did have a rudimentary one when they met me) and a team. We have a training cum team building program especially for the web 2.0 products and services. Check out http://www.alphonsoinformex.com/technopreneur.html

  6. Be it an It firm or some other prodct, the nuances of starting a venture is more or less similar.. isn’t it ?

  7. Hi Alok,
    Good insights into starting a venture.I guess it was Persistent software,Pune.I guess you should have mentioned about the marketing of the product as well.Since,you have mentioned about soul mates(like A & B),they form a team so worth mentioning about this point as well.

    Also,Ideas are impotant but they should be unique and you should go i the right channel for execution.

    Do check my post http://thoughtsprevail.blogspot.com/2007/01/new-era-of-entrepreneurial-india.html on the same topic.

    Your feedback is highly appreciated.But I do feel that the booming Indian economy is one of the reasons that more and more people are becoming Entrepreneurs eg.Recenly,many people in IIM turned down heay pay packet jobs to turn their dreams into reality.

    -Himanshu
    (I’m blogging at http://thoughtsprevail.blogspot.com)

  8. Alok, Congrats man on the prize. Nice post.

  9. […] location India – Bangalore or Delhi 5. A blog post by Himanshu about the contest 6. Another winning entry – Nuances of starting a venture 7. Yet another entry – Challenges of becoming first […]


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