Published March 12-16, 2021
I have excerpted this from a series I first wrote in 2004.
From Employee to Entrepreneur – 1
I recently met a friend I have known for a long time. We have known each other enough for me to discuss his work and career. While the work he was doing continued to be interesting, I sensed a restlessness. There was a feeling that perhaps he should look at alternatives. Perhaps, a career at another company. I suggested that he should look at doing something on his own as an entrepreneur. He had obviously thought about it, but something was holding him back. Having spent over a decade working for large companies, that path was easy to follow. It was a predictable future. Thinking about a start-up either joining one or creating one was a path that was different and unknown. Perhaps, the security of a job outweighed the risks of entrepreneurship.
I have been just the opposite in my career. Even when I started working at NYNEX (now part of Verizon) in the US in 1989 after my Masters at Columbia University, I was clear that in the very near future, I would start my own company in India. That was the advice my father gave me when I left India for further studies in the US. If he was able to return to India in the mid-1960s, I had better do so now! Because of family compulsions, his entrepreneurial career began a little later after he returned from the US. I need not wait.
And so after just over 2 years of working, I left NYNEX, returned to India, and launched out as an entrepreneur. It has been a mixed scorecard. But I could not think of living life any other way. Give me the ups and downs of the entrepreneurial journey with its mountains beyond mountains than the security of employment.
Yet, I understand that not every one of us can become an entrepreneur. But there are many who consider it. Just like those abroad who consider returning to India, contemplating entrepreneurship is also like the year N+1 syndrome. It keeps getting postponed to the next year and that next year rarely comes. As time goes on, it keeps getting harder to do.
From Employee to Entrepreneur – 2
As I talked to my friend, I realised that it wasn’t an easy decision at all. The transition from an employee to entrepreneur is one of the toughest decisions anyone faces. What should I do? How will I start? Where will I raise the capital? What if things don’t work out? What will be the impact on my family? Is this the right time? A million questions keep popping up. While the answer for each question requires deep introspection, there are some common facets of this transition which can be abstracted out.
Just like driving down route 1 along the California coast, the entrepreneurial journey has its mix of tricky turns and magical moments. The road to entrepreneurship has more thorns than roses, but it is an expedition well worth taking at least once in a lifetime. This is what I told my friend and this is what I’d like to share with you.
The decision to be or not be an entrepreneur is an intensely personal one. It is one which needs to be discussed and debated with family and friends. It depends on each one’s appetite for risk. There is never a right or wrong answer, just as there is never a right or wrong time. The fundamental decision has to come from within.
I also believe that once the decision is made to leave the world of employment and move to the world of entrepreneurship, the safety line needs to be cut. If we know that there are always the options of going back to the safety and security of the other world, it will be much harder making the entrepreneurial option work. In a sense, as we close one door, other doors will open. But we have to close doors. We have to believe that making the new venture succeed must be akin to a life-and-death battle. One has to fight knowing that there is no looking or going back.
Once the decision is taken, how do we begin? Where do we get that wonderfully innovative idea which can transform the world? The answer is: s-l-o-w-l-y. While it is always possible that one may know exactly the niche to focus on, more often than not, one of two things will happen. The idea itself may take time to crystallise clearly, and the idea may not turn out to be as great as we thought from the other side of the fence. So, just focusing on the idea is not going to be enough.
The most important thing for an entrepreneur is to build a mental model of the industry under consideration. The mental model takes time to form. It is more about internalising the external views, developments and trends. It is the mental model which creates the foundation for the business. Understanding the bigger picture takes time, but is extremely important because of the challenges we will face on a regular basis as we seek to build out our business. Change is continuous and constant. It is the mental model or the latticework of mental models that will help us navigate the terrain, not with maps but with a compass.
Another way to start thinking is to travel. I have found travelling internationally to be one of the best strategies for thinking and ideation. As we leave the regular environment and put ourselves into new scenarios, even new countries, we get opportunities not just to use the wide-angle view, but also a to dig deeper. A couple of weeks of travel combined with meeting people in different lands can be one of the best tonics for thinking and imagining tomorrow.
Postscript: It is never easy giving up the comfort of a monthly paycheck to the certain uncertainty that entrepreneurship does. But once it’s done, there is no looking back. Remove the safety net and experience the freedom. The odds of failure are high, but the rewards of the journey are even greater.
I have excerpted this from a series I first wrote in 2005.
Bootstrapping a Business – 1
A friend recently asked me a question: How does a product-focused start-up bootstrap itself? How does it not get caught into the services trap? This seemingly innocuous question made me think back to my career as an entrepreneur and reflect on a challenge facing a large number of early-stage companies with ambitions of building products out of India.
I have faced two different challenges in my life when starting up. The first was when I returned from the US in 1992 with a colleague with a dream of building one of India’s premier software companies in five years. We never got too far. We tried to do products (first, a multimedia database, and then, an image processing software) and balance that with taking up projects from the US and India to get the cash flows going. This split personality didn’t help. As the product sales didn’t happen, we got more and more into taking up local projects to make ends meet. A couple years after our return to India, we realised that we weren’t going to make it. This was not the dream company we had wanted to create. It was time for a reboot.
That was when IndiaWorld was born. This time, I wanted to make sure we focused on one thing (the Internet) and also ensure that we kept the money coming in. I did need a small initial investment to get things going. The business model on the Internet wasn’t very clear then (in 1995). I tried subscriptions to a content site, and then eventually made it free eighteen months later. Advertising had not yet taken off. What got the money coming in was services to corporates in the form of website development. As we built and hosted the websites, we managed to persuade companies to start investing in advertising and we had our portals to provide them with an end-to-end solution (and good margins for us). Over time, the website development business got increasingly competitive, but by then the high-margin advertising business had taken off.
So that is the story of two different businesses with two different strategies for bootstrapping. In entrepreneurial ventures, every company is different and that’s what is so fascinating. Building things from scratch where none existed is what excites me. I see the future as an instantiation of someone’s vision. So, why can’t it be ours? And to create tomorrow’s world, bootstrapping a business right is very important.
Bootstrapping a Business – 2
John Hagel laid out the challenge and importance of bootstrapping a business:
Bootstrapping is about capability building.
It is a widespread phenomenon, visible in biological evolution (indeed, it may even have played a role in the emergence of life itself) and a wide range of other complex adaptive systems. In this context, most of the discussions treat bootstrapping as an emergent process – it is something that plays out on its own, governed by its own dynamics.
It is a powerful concept with implications for business far beyond the startup world. It potentially helps businesses to cope with accelerating change and growing uncertainty, provides an interesting new way to think about leverage, learning and innovation, enhances scalability of business operations and may even provide a key to at least one form of increasing returns. It is also a critical concept for economic development.
Perhaps as businesses grow larger and gain access to more resources they lose interest in bootstrapping as a management technique. That would be a big mistake. Bootstrapping imposes both a discipline and a creativity that has enormous value regardless of the scale of operations. If we need a reminder of that, just look at the bootstrapping that continues to shape the vast ecosystems encircling our globe.
For an entrepreneur, the fundamental question is how to begin. How does one bootstrap the business? Brad Feld, a venture capitalist, put together a how-to list for entrepreneurs:
- Figure out how much cash you really have
- Figure out how much time you really have
- Pick a domain and go deep
- Surround yourself with experienced people
- Find angels
- Figure out who you want to look like in 5 years
- Get customers
- Learn everything you can about what you are about to do
- Figure out your fallback plan
- Figure out what to do if you fail (face your fears before you start)
The last point is worth keeping in mind. As Feld writes: “One of my favorite quotes is from Dune – “Fear is the mind killer.” I’ve always believed that fear is one of the most completely useless emotions. “What if I fail” is one of the biggest fears of a startup entrepreneur. Face it – play with it – figure out what happens if you fail. In most cases, failure is not going to be death (although it could be very uncomfortable). Understanding what your fears are and trying to stare them down in advance of actually encountering them will help you enormously in the process of trying to create a new company.”
Bootstrapping a Business – 3
Dave Winer had this to say about bootstrapping in the context of software: “When engineers build a suspension bridge, first they draw a thin cable across a body of water. Then they use that cable to hoist a larger one. Then they use both cables to pull a third, and eventually create a thick cable of intertwined wires that you can drive a truck across (actually hundreds of trucks). That’s a bootstrap. First you take a step you know is on the path, learn from it, and use it to lift up the next level.”
Greg Gianforte, CEO, RightNow Technologies, has co-authored a book on the subject: Bootstrapping Your Business: Start And Grow a Successful Company With Almost No Money. This is what he wrote in an article on Sandhill.com in March 2005:
I define “Bootstrapping” as the act of starting a business with little or no external funding. Bootstrappers don’t write lengthy business plans, chase deep-pocketed investors, or indulge in overly academic market research exercises. Instead, they focus all of their considerable energy, brainpower, determination and skills on creating a business that can actually succeed in the real world.
In fact, I can offer at least eight solid reasons why Bootstrapping will consistently deliver better results than the “fund-and-burn” model that has become entrenched in Silicon Valley and elsewhere:
Bootstrapping ensures that you build your business on a legitimate, real-world value proposition. When you’re Bootstrapping, you’re forced to deal with customers and to fulfill their needs from Day One.
Bootstrappers initiate the critical sales learning process sooner, not later. Selling is the hardest job of all. You have to learn how to be absolutely great at selling your product or service, and then teach others how to be absolutely great at selling it too.
Bootstrappers don’t waste money; they make it. If you have $100,000 or $1 million in funding, what do you do? Leave it in the bank? Of course not. You go out and spend it or, to use the commonly accepted term, you “burn” it. In a Bootstrapping model, on the other hand, waste simply can’t occur because there is nothing to waste.
Bootstrapping accelerates time-to-market and time-to-profitability. If you go the Bootstrapping route, you can start your business immediately. Immediately!
Bootstrappers are less likely to make big, fatal financial mistakes. Because they don’t have huge amounts of cash, Bootstrappers can’t make the kinds of huge mistakes that often destroy venture-funded companies.
Bootstrappers are forced into unconventional thinking. Necessity truly is the mother of invention.
Bootstrappers have more freedom and flexibility. Bootstrappers can change direction overnight if that’s what circumstances call for. This adaptability significantly increases their likelihood of near- and long-term success.
Bootstrappers wind up owning much, if not all, of what they create.
From my personal experience, I could add a ninth reason to this list: Bootstrapping is good, clean fun. When you bootstrap a company, you’re far less likely to find yourself in situations where you have to make promises you can’t keep or where the temptations that go along with large sums of unearned cash present themselves. Instead, your entire focus is on creating value. You market, sell and serve your customers every day as if the business depended on it because it does.
Postscript: While I have failed with many bootstrapped ventures, two of these have become proficorns.