Author: Rajesh Jain

Ego as the Enemy

I was meeting with a senior person from a large company. I had spent a lot of time preparing for that meeting. Half-way through, the person I was meeting called an abrupt end to the meeting. I was taken aback – I was just two-thirds of my way through the presentation thinking I had much more time. I could have protested then, but I decided not to. I wrapped it up and came out. I was very angry then – How could someone do this to me? Did they not have respect for my time? I felt a rage building up within me.

I then decided to put my ego aside, and think with a calmer mind about the meeting. I had the good fortune to get the time I did. And during that time, the discussion that happened had actually opened up new lines of thinking for the solution I was pitching. I spent more time replaying the meeting, and realised that there were many positives from the interaction. In my initial fury about the curtailment of the meeting, I had almost lost sight of the gains.

Ego is a killer, a disease. We have to learn to set it aside. Anything that hurts us is not an insult that we have to take personally, and therefore respond with equal ferocity. By controlling one’s ego, it becomes possible to spot opportunities and openings that may not have been previously visible. Ego is like a fog that hampers our vision.

By not throwing one’s weight or title around, there is so much more that can be learnt. As an entrepreneur, one should be ready to meet anyone in the organisation to pitch the product to. And every meeting will have some learning. In the past few months, I have done 80+ meetings with marketing and digital heads to pitch my idea of Velvet Rope Marketing. I told my sales team to set up meetings with whomever was willing to listen – without worrying about designation. I go into each meeting with humility – as a student keen to learn about the world of marketing as seen by the people I am meeting. This has helped me refine my ideas through the months, and open up many new angles (linkages to referral marketing and loyalty programmes) which otherwise would have been closed.

Entrepreneurs must set ego aside. In fact, this is true even after one is successful. There is much we do not know about the world. If we go in without ego in meetings, we are more likely to meet more people and learn more things. Over time, by connecting the dots from all those meetings, a new image will appear – enriching our own mental models.

Will be continued soon.

Worst Case Scenario

Entrepreneurs are optimists by nature. Data shows that new businesses have a more than 99.99% chance of failure. Yet, entrepreneurs feel they have a better than even chance of success. In fact, that optimism is one of the hallmarks of an entrepreneur. The low success rates of new ventures is why I also believe that an entrepreneur goes to work each day working to reduce the risks of failure.

It’s one thing to think about future success. But what many entrepreneurs fail to take into account is what could happen in the event of failure. This “worst case scenario” thinking is very crucial and needs to be done before starting up. What is the personal impact you are willing to bear – financially and otherwise? How long are you willing to give the venture before you call it quits? What are the things that can go wrong – because many of them will?

I was speaking to a friend recently and he said he had lined up 9 months of capital and was starting up. His product would be ready in 4 months and it would give him 5 months to get the early testing and initial revenues. I told him, “This is the best case scenario. Have you thought of the worst case scenario? What if your product development takes time? What if market feedback takes longer? You need to double the runway you have from 9 to 18 months. In effect, you need more capital to reduce the risk of failure.”

When I started IndiaWorld in 1995 after multiple failures, I asked myself the same worst case scenario question. My answer then was – I would lose the remaining of my savings and perhaps some family money, and perhaps two years of my time. At that time, I wasn’t thinking much about the upside. All I had to do was to make a decision whether I could accept the worst case situation. And from then onwards, every effort was towards ensuring that I never reached that outcome.

Thinking through the worst case scenario prepares one mentally so that one is not surprised when things do not go according to plan. As optimists, entrepreneurs tend to think everything will go according to plan. But what if it doesn’t? That is why entrepreneurs think of what can happen if things do not go according to plan.

Tomorrow: Part 40

The Moat

To succeed big in business, one way is by constructing a moat. This concept was popularised by Warren Buffett:

What we’re trying to do is we’re trying to find a business with a wide and long-lasting moat around it, surround — protecting a terrific economic castle with an honest lord in charge of the castle.

What we’re trying to find is a business that, for one reason or another — it can be because it’s the low-cost producer in some area, it can be because it has a natural franchise because of surface capabilities, it could be because of its position in the consumers’ mind, it can be because of a technological advantage, or any kind of reason at all, that it has this moat around it.

But we are trying to figure out what is keeping — why is that castle still standing? And what’s going to keep it standing or cause it not to be standing five, 10, 20 years from now. What are the key factors? And how permanent are they? How much do they depend on the genius of the lord in the castle?

Another way to think about the moat is to ask the question: “What is your 10X advantage?” What makes you so much better that a challenger will find it very hard to switch your customers. For many tech businesses today, network effects become the moat that helps them create a dominant position that becomes hard for a competitor to penetrate.

During my IndiaWorld days of 1997-99, the popularity of the portals became a moat that helped us grow. People came in for one of their interests and stayed on to find others. Samachar with its single page news aggregation became the magnet. Interestingly, everyone else tried to build their own editorial teams. The aggregation of the most important news on a single page became Samachar’s differentiator and the word spread virally for it to become the default ‘home page’ for many Indians globally. Habits once formed become hard to break – which turned out to be good for us.

Today, in Netcore, one of the moats we have created with our email business is ensuring better deliverability of emails. This leads to more opens, clicks and transactions. Email deliverability becomes a moat that is hard for challengers to cross.

So, one of the first questions for entrepreneurs to think about is about how to construct the moat. That is the foundation for future success.

Tomorrow: Part 39

Latticework of Mental Models

I came across the word “latticework” many years ago when a friend recommended an eponymous book by Robert Hagstrom about investing. (The book was later republished with a new title: “Investing: The Last Liberal Art.”) The book provides an overview of the major mental models in various disciplines — physics, biology, sociology, psychology, philosophy, literature and maths, and how all of these apply to decision making.

Writes Hagstrom:

The process of building and using a latticework of mental models is an innovative approach to thinking, and one that can be intimidating to many, to the point of mental paralysis. Fortunately there is a road map to the process that is easy to understand.

[According to] John H. Holland, a professor in two fields at the University of Michigan—psychology, and engineering and computer science, …innovative thinking requires us to master two important steps. First, we must understand the basic disciplines from which we are going to draw knowledge; second, we need to be aware of the use and benefit of metaphors.

…The ability to link mental models together and then benefit from the connections assumes that you have a basic understanding of each model in the latticework…Holland argues, metaphors are much more than merely a colorful form of speech, even more than representations of thoughts. They can also help us translate ideas into models. And that, he says, represents the basis of innovative thinking. In the same way that a metaphor helps communicate one concept by comparing it to another concept that is widely understood, using a simple model to describe one idea can help us grasp the complexities of a similar idea. In both cases we are using one concept (the source) to better understand another (the target). Used this way, metaphors not only express existing ideas, they stimulate new ones.

Entrepreneurs need a latticework of mental models to solve the problems they are likely to be confronted with. The best ideas often come at the intersection of two or more disciplines. Therefore, understanding the core ideas from different disciplines sets the right foundation for the thinking necessary for questioning the status quo and breaking through obstacles.

One of the regrets I have in life is that my early education did not include enough of the liberal arts. It is what I emphasise now to young people I meet – especially those with an engineering background. An early start can lay a deeper foundation for decision making. It is never too late to begin. Explore the most important ideas in different disciplines and create your own latticework of mental models to become a better entrepreneur.

Tomorrow: Part 38

Entrepreneurship vs Investing

All entrepreneurs do not necessarily make good investors – be it in public markets or private companies. I am one of those – I like the world of entrepreneurship. But over the years I have realised I am not a good investor. There is a big difference between the two.

Entrepreneurship is all about doing it yourself – taking an idea to reality, making it happen. At each stage of the journey, there are challenges to be overcome and risks to be reduced. Each day has a thrill in itself – the breakthrough meeting, the new feature idea, the customer feedback that just makes your day. Each day brings its unexpected joys – with of course the down moments. It is like a game of ‘Snakes and Ladders’ being played daily. There will always be more downs than ups. But the ups take you much higher than the descent of the downs.

As an entrepreneur, you are also very much in control. You decide your own future as you make many micro decisions. At the end, it is you who is responsible for success or failure. It is this responsibility that you have to live with as you seek to make something better in the world around.

Investing is very different. When investing in private companies as an angel or early-stage investor, you have to relinquish the running of the company to the entrepreneur. This realisation that one is not an entrepreneur is not easy – you cannot be giving advice constantly. The entrepreneur is on the front lines and seeing things differently from you. You are not the driver, but the passenger. You may guide with a compass, but the map is with the entrepreneur.

Investing in public markets is about understanding which companies to bet on the future with limited information – and then once the choices are made, to wait patiently and think long-term. It is not about daily activity that is the soul of the life of an entrepreneur.

In both the cases of private and public investing, the control and steering wheel lie elsewhere. One has to get comfortable with that.

Investing is not my forte. I like the thrill of building from scratch and exploring new domains. I tried my hand at both private and public investing, and did not like it. There are many entrepreneurs who have become very successful investors – and I admire them. The transition is not an easy one. For me, it is always going to the world of entrepreneurship – with all its risks, thrills and rewards.

Tomorrow: Part 37