Rajest Jain is the Founder and Managing Director of Netcore Solutions Pvt Ltd (messaging and security solutions, and mobile data services), and has made a number of investments in various companies as part his own fund (Emergic Venture Capital). He had earlier set up IndiaWorld, India’s first Internet portal which was launched in 1995, which was acquired by Sify in November 1999 for USD 115 million (then, Rs 499 crore).
Way back in 2001 he had written an informative article on Entrepreneurial learnings that is reproduced below.
Entrepreneurs do not start to create failures. Yet, only 1 in 100 startups succeeds. If one were to ask entrepreneurs when the start about their chances of success, most would give themselves greater than even odds, even as high as a 60-70% chance of success. The reality though, as we know, is very different. While no one can predict success or failure, it is important to do things right to begin with.
There is no such thing as a good time or bad time to start companies. All times are equally challenging. Opportunities are always going to be there. What is important is the attitude which one takes to entrepreneurship. Nothing in the past that one has done can prepare one for “chucking it all up” and becoming an entrepreneur. No management education or theory can provide answers to the Right Way to build a company from scratch. Many of the best of management thinkers have been found wanting when it came to running their own company.
In this New India that is being created, first-generation entrepreneurship is here to stay. In parallel, we also have Venture Capitalists armed with money who are struggling to determine the right formula to maximise chances of success.
One keeps hearing about the “next hot thing” – whether it is Wireless, BioInformatics or IT-enabled services. That India is being “internationalised” is in little doubt when one does not hear “rupees” as the currency – everything is in “millions of dollars”. The hunt is on to create the next Hotmail – or the next Infosys.
Last Saturday, I gave a talk for TIE on “The New Internet”. The presentation, while showcasing the opportunities for the future, ended with some of the lessons I have learnt in the last 10 years as an entrepreneur.
These points are what I am elaborating below
1. Importance of Vision: Dream the future
Envisioning how tomorrow can be different is the starting point of the dream. For this, one should not just look at the immediate area of interest, but also consider other related areas which can impact it. For example, today, the world of computers, communications and software are inextricably tied together. Similarly, even in biotechnology, computers and software are playing an increasing role in the emerging areas of genomics and proteomics. Considering developments as an aggregate is important in building the vision of tomorrow. What the vision does is brings clarity: it helps in making many decisions which otherwise may be hard because one is not sure.
2. Think 2-5 years hence; near-term opportunities are gone
As one thinks about the future, it is necessary to look beyond the near-term. A new business must not be pressured by time at the start. If one is looking to capitalize on something in the next few months, it is already too late – many of the companies targeting these opportunities would have been formed a few years ago and thus are better placed to do so. It takes many months to build the foundation for a good business. Hence, the time-frame for targeting opportunities must be in the 2-5 year horizon. This is not easy because while we can say with some certainty what is likely to happen in the next few months, it becomes harder to look further ahead. But then that is the challenge: this ability to build a framework — a mental map – of the landscape in the future is what can help create the right foundation for the business.
3. Best way to raise capital is by being profitable
While the natural instinct on starting up may be to go and raise capital so one can build a business top down (with money and a strong management team), I believe that the best way to build a lasting business is by being profitable as quickly as possible. This is not to say that one should not raise capital or build a strong management team – both are very important. However, the objective inherent in the business should be to be cash-flow positive as soon as possible. For this, it is important to build a “bread-and-butter” business, which ensures that money keeps coming in and pays the salaries every month. Nothing is as habit-forming as making profits (or for that matter, losses). Keep in mind the long-term vision, but also work on generating cash in the near-term. Profits are the best motivator, and also a strong reinforcement that one is headed in the right direction.
4. Need to Stay Alive long enough to aim for Gold
No business is a 100-metre sprint. To win the marathon, entrepreneurs need to ensure first that they can last the distance. To keep running, it is important to survive. What is needed is that once the space has been defined, it is important to “jump in” and keep swimming. Opportunities will become visible when one is looking for them. The longer one survives, the greater the chances of longer-term success. There is an important lesson to be learnt from the dotcom bust in the past 2 years: while everyone realized the opportunity that lay ahead as Internet penetration and usage increases, most went in for a “big bang” approach in the near-term and spent a lot of money in the process. Those who preserved the cash now realize that there is much less competition to contend with as others have simply burnt out.
5. An entrepreneur’s greatest strength is Passion
Entrepreneurs are dream-sellers. They have a vision of how tomorrow can be different and better, something which is not so obvious to others. In doing so, they have to convince non-believers and nay-sayers. They have to build a team and get customers, battling odds at every stage. In doing so, perhaps their greatest asset is the “infectious enthusiasm”, their passion for what tomorrow can be. This is where the ability to have a clear vision and tell the story – with conviction — becomes very important.
6. Be prepared to fail – and learn; Experiment and Explore
Failure comes with the territory. Failure is more likely than success. An entrepreneur will face more down-days than up-days. What is important in this is to keep learning. Embedding learnability in oneself and one’s people is what will set apart the winners. To fail and learn means one has to take risks, one has to experiment and explore. It is only through this iterative process that the good ideas will bubble up. There is nothing like “The Next Big Thing”. These phrases might sound great for a marketing campaign, but as an entrepreneur, the next big thing is more likely to be a series of innovations, small incremental changes.
7. When building, don’t think of exit; Build to Keep
Too often, entrepreneurs think of exit strategies (IPOs and MAs) even as the business is being built. This is the wrong approach. Build a business to keep, to manage forever. The business has to be something which makes you wake up every morning with excitement. One has to feel that the business can provide that joy – only then should one consider starting up. Exit Strategies and Wealth Creation are incidental and not controllable by the entrepreneur. The business must be like your baby – one that you will raise and nurture.
8. Forget the stock markets – they are irrelevant
In today’s world, the stock markets, especially Nasdaq, have a big bearing on attitudes towards technology. TV Channels like CNBC and financial websites provide near instantaneous and round-the-clock coverage of what is happening. In times like these when the markets are down, there is doom and gloom around. It is easy to get swayed listening to what people are saying. Yet, what they are talking about is the near-term and the challenges their businesses face. For a startup, it is important not to get swayed or overly concerned about what is happening on the stock markets. The markets only come into play when one wants to sell some stock, which is only a distant possibility. The focus should be on thinking about the impact of technology on businesses, and how consumers lives or enterprise processes can be better.
9. The First Mistake can be the Last
Running a startup is a “life-and-death” business. An entrepreneur is perhaps no more than two or three mistakes away from business death. This makes it very important to weigh decisions carefully when they are made. Some decisions, especially in the choice of customers, need to be balanced so as to meet near-term needs with the desire to build a long-term business. For example, an important customer might demand significant product customisation. While there is no doubt that this would be of great short-term value, if it impacts the company so as to take away all its key development resources, then care must be taken before committing to the customisation. In these cases, there is no right or wrong answer: every scenario is different. These are the kinds of decisions which an entrepreneur has to make constantly, and especially in the early stages, every decision has the prospect of being the fatal one.
Once the initial thinking and planning has been done, it does not mean that the process must stop. The cycle of Reading-Thinking-Writing must be continuous one. This is the source of new inspiration and new ideas. It also serves to evolve the business in the right direction, not something which is frozen in time at the start of the business. The time investment for this read-think-write cycle has to be made by the entrepreneur; it is not something which can be delegated. No one else has the same frame of reference as the entrepreneur. It is important to keep imbibing new knowledge to continually revisit and make modifications to the map and therefore the ensuing strategy. The Internet offers access to the best of content resources – it is for the entrepreneur to make the time investment. Reading needs to be combined with Thinking to see how things may need to be done differently, or how the future is evolving. Writing helps in putting things in perspective, and in sharing one’s thoughts with a group of people for further inputs.
11. Faith in God
Above all, one needs Faith in God. There are many times an entrepreneur will feel that all doors are closed and there is no escape from the difficult situation one finds oneself in. It is at times like these that God shows the way – it is for us to see it.