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  • Raising Investments? Think about these…

    A significant portion of startup news deals with startups raising investments and clearly we see such news creating positive waves in the entrepreneurial ecosystem. Why do such news create these positive vibes, and what should other entrepreneurs infer from this is subject of another blog, but for this one we shall limit ourselves to what entrepreneurs need to think of when looking for external investments.
    Investment events are a validation in some form of the business potential of the entrepreneur’s idea, but it definitely is not the ultimate state a start-up should reach! The journey from on-boarding an investor to realizing a self-sustaining business with a lot of customers buying the product/service is really the aspiring state for start-up that is just blossoming. Getting an investor thus, is an important but not a necessary milestone in the start-up’s journey.
    External Investment could take many forms, prominent forms include: Seed Capital, Angle Capital, Venture Capital etc. Each one of these investors come in (often not voluntarily, but through an elaborate persuasion by the entrepreneur), at a different state of the start up.

    • Seed Capital is one of the investments coming earliest in the life-cycle of a startup – could often be just after the first investment of the founders. This capital investment is generally acquired when the firm at a stage where there are a lot of experiments going on and the numerous hypotheses on the ideas are still being validated. The buy in by the investor would mostly be based on the entrepreneur’s ability or the belief in the idea itself.
    • The Angle Capital could be next in the series of investments raised, where the experimentation has possibly yielded a limited range of options to venture into and would benefit from an individual who could be more than just an investor – possibly opening up his/her network to allow the product/service be adopted. There is more than just the return expectation; the buy in to the idea is a bit more personal & emotional.
    • The Venture Capital generally comes in at the growth stages of the start-up. At this stage, most of the uncertainties of the business arising from the customer’s side (could be product features, pricing, leads, sales cycle etc) are all negotiated and settled to a large extent. The growth plans of the venture, market size, return on investment etc would be key factors that could get the venture capitalist on-board.

    On-boarding the right investor isn’t just important for a start up, but could really get the help the start up see the list of the day and overcome its survival challenges. Choosing the wrong investor however, could be catastrophic for the venture.
    Start-up investment by its very nature requires a lot of patience and is riskier than debt financing models – where there is periodic return on investment in the form of interest earned. Expecting a start-up to give returns within a year of investment is in most cases unrealistic!
    Very often in the geist to raise the investment early, entrepreneurs raise capital from investors who do not understand the dynamics of the way start-up funding operates. Many entrepreneurs are left with painful experiences and sore relationships with such to such experience.
    These issues are most common amongst fist time individual investors – it is really an expectation difference and communicating early and clearly about the way such an investment would operate is the best way to handle such scenarios. Personality fit is important to ensure that the investor relationship is working well.
    In addition to the financing that an investor gets to the table, following are some of the other issues an entrepreneur would need to think of when raising an investment:

    • Past Track Record of the investments – you could benefit from not just the background understanding of the investor but also the kind of inputs one could expect once on-board.
    • Expectations of returns (may be in percentage terms) on the investment – will you be willing to share the equity asked for given the background?
    • Network of the investor – could be enormously useful not just to gain/extend the product traction, but also hiring the right talent. A lot of feedback on the prospective employee could be learnt about. More about hiring the right employee here.
    • What are the other investments (portfolio) that the investor has? – If this is the only investment made by the investor, then the risk is possibly higher on the start up! The above mentioned scenario could be more realistic

    The entrepreneur when seeking funding should necessarily do the homework on the investor and not just be enamored by the spreadsheet projection! A realistic alignment is better than a dream that is created without solid grounding.
    An experienced investors would have seen a lot of startup issues at close quarters and the suggestions and experience would be of enormous value – investing in choosing the right investor at the right stage and aligning the incentives appropriately would be every important.
    Most importantly, you would always need to remember the following – investors are in the company to primarily support your venture – they share the risks of the venture with you, they would only make money for themselves when they make an exit. So ensure that there are exit opportunities for the investors – not having exit opportunities would not make the deal worthy of interest to the investor.
    Understanding the pressures of the investors would definitely help explain the numerous horror stories that float around in the ecosystem. The investors are also in it to bake the cake, so that they could make some profit, right!
    Note: We haven’t discussed about debt financing here, debt financing should ideally come at a later stage of the venture and if taken up at the wrong time, it would

  • Brahma: Why dont we workship him?

    An interesting aspect of trinity of the Hindu religion -Brahma (Generator), Vishnu (Observer), Maheshwara (Destroyer); is that of the three Brahma or the creator is not worshiped unlike the other two of the trinity. This question got me thinking and here is a documentation of my thought on this issue.


    The Mythological Explanation:
    The mythological explanation as to why Brahma is not worshiped could be found even in the story of the famous Indian temple of Tirupathi (read here). As legend as it, it was the curse of Rishi Bhrigu – Brahma shall have no idols or temples of worship in Bhooloka (read earth)!


    Rationalizing beyond the Boon:
    I however feel this is more symbolic and has developed over multiple generations into its current interpretation. Following is how I see attempt rationalizing this behavior of not worshiping Brahma (the creator) amongst Hindu:

    1. Brahma who is the creator is accompanies by his consort – Goddess Saraswathy. She is also considered the Goddess of learning. I have mentioned about the symbolic relationship the way the Trinity and their consorts are related in an earlier blog. Brahma being the creator is one who could also be considered an experimentalist – some one who keeps trying out many different things – so as to be able to create new things. With every new experiment there is some insight and understanding that is obtained leading us to the creation of new knowledge. This knowledge could be accumulated and preserved as the distillation of all know-how thus far. In the Hindu mythology, my guess is these are represented as the “Vedas”. Sarasvathy who is Brahma’s consort holds these Vedas in her hands. Clearly, the value is for the learning that is derived from the experiment and we often find Saravathy who holds Vedas (read compiled Knowledge) in her hands. Brahma however being the experimentalist is generally forgotten. 
    2. Another possible reason could be gained from the observation of the development of technology and its capability. Technological improvement across generations could have made it extremely easy to create newer things – in the start up world today, we find so many tools available that the need of an expert engineer is constantly declining – we few tweaks here and there or search on the internet for help could really make the whole thing easier! It is always possible that in the whole process the engineer (Brahma) who created these tools and kits for others to use is easily forgotten.
    3. Frequency of occurrence of failures in the process of experimentation and learning, could potentially be another source. In fact, failures are more common than successes in the process of experimentation – recollect Thomas Alva Edison saying that he knows a thousand ways the bulb couldn’t be create before he finally built the bulb! The sustained effort in experimenting, failures and learning new things could easily dissuade one to continue the efforts further. All these make it harder to appreciate the role of some one who makes failure common place – this could be another reason why Brahma isn’t worshiped as much as the others in the trinity.
    4. Another aspect that I could co-relate is the experience when one attempts to start off. One often starts off with an idea, and the various challenges that come in the way of executing what was initially conceptualized could guide the idea into a completely different domain. The challenges of survival of a firm (or may be human) weigh so heavily beyond the ordinary that just the joy of creation is often lost or modified multiple times that is doesn’t bear any significance.
    This was a parting observation about the pattern of how many  mythological stories have the asuras (generally understood as daemons) do a penance so as to receive a boon from the Creator. The general belief in most cases is that it is relatively easy to please Brahma, the Creator, than Vishnu, the Manager. May be this is possibly because of the fewer people worshiping Brahma. It could also be that he is the one who is most open to seeing how addition of newer ability and skills (obtained through penance) could add in so as to enable new experiments and lead to the process of creation!


    What did I really take away?
    Looking back at this rationalization attempt, could this explain why we don’t really worship Brahma? I am not sure if this explains the whole aspect of why we fail to worshiping Brahma, but this is definitely is an attempt to get the attention of the readers on to the importance of appreciating experimentation, and being able to take in failures in the process of experimentation as a natural process.

  • Employee selection in Start ups: A few useful pointers

    Entrepreneurship
    is often considered the pursuit of a goal without being restricted by
    the limitations imposed by resources. The goal could be limited only to
    financial gains, but could also include larger gains. Invariably, each
    of these goals has an end customer who benefits the most from the action
    of the entrepreneur.     Often, if one doesn’t think of the customer right from the beginning as suggested in the earlier post, one realizes this extremely practical learning at a high cost!  
    Translating the idea into a product/service without being restricted by the resources currently under control would imply seeking support from other sources. While co-founder (read about benefits/drawbacks and implications here) is definitely an option considered there are many other who do not like to cede control over their business and attempt going for an employee who could help realize the idea/concept into a product/service on offer.  
    My interactions with the start up ecosystems have helped me find some better approach that some entrepreneurs prefer. Here are a some of the pointers I believe would help lot of other entrepreneurs:

    What role am I hiring the employee for?
    Often the lack of structure could confuse the founder about the skills that one is trying to look out in his employee. Would it be apt to choose an employee for the IT development involves or for the sales side?
    My personal advice in this is to keep the business aspect with the founders always – not because it could be a business secret, but because there could be important decisions that need to be taken on the ground and direct customer interactions could help this process.
    The need to hire an employee begins from the need to accelerate the production to revenue cycle of the business. This gives a complete spectrum of activities and the notion of job-description wouldn’t make any sense here. Recollect the notion of uncertainty again here – would you prefer some one who is a sort of specialist in one area or a person with generic skills adaptable to the surprise scenario that is so common in the entrepreneurial journey.

    Clearly, independent of the dominant role for which you are hiring. looking for some one who is flexible is better – lets call them Jack of All Trades (JoAT). 
    Note:JoATs are better as long as there is no significant specialization that is to be needed in the product/service development. [We are still in the survival phase]. Working would JoATs for too long could in fact begin limit the growth of the business. Switching over to specialists at the right time is important as one navigates the growth stage.
    What am I looking for in the new employee joining?
    Flowing from the above aspect of preferring a JoAT to a specialist what needs to be understood is that ability to learn quickly is important. If you employee is not willing to bend his/her back and put in the effort with you in your pursuit it better stay away from the candidate. Many candidates come in with the notion of a fixed working time – if one are fixated with a notion of rigidity, it definitely an indicator of the inflexibility that is so essential to live through the survival phase.

    And remember to take note of the thumb rule – attitude is more important than aptitude – this is the ground on which any recruitment has to be based. 

    Reading this blog and thinking about it, is surely a precursor to the large issue of organization culture that is often ignored in start ups – this is definitely an issue for another blog!
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  • Stress: Physical Conditions

    In the last byte, we looked at the various interpersonal demands that could act as a potential source of stress. In today’s byte, we look at how the physical conditions in a work place could act as a source of stress.

    It would be a personal experience for almost all of us – invariably when we are tiered having worked for a long time on something, and it someone else asks for something we shout back! This is a common experience and shouting is a reaction that expresses the stress our body has had.

    Such stress would be higher if the individual has been working in an environment that doesn’t have a conducive atmosphere – say a temperature that is non ambient (could be working close to a furnace for long hours!), an extremely crowded space where lot of people are cramped and working on the production process etc. Such inhuman working conditions are the reason why factories with such harsh conditions are called “sweat shops”.

    It is important to realize that the physical demands of work are often occupation specific. In the case of military pilots who fly high-speed jets, the risk involved would be of gravitationally induced loss of consciousness; in the case of CEOs who globe-trotter pretty frequently, would complaint of jet lag and loss of sleep. All these form sources of stress that evolve out of the work environment.

    In the more common IT scenario, an ergonomic misfit between the person and work place would lead to stress too – the forms could be eyestrain, neck-stiffness and arm/wrist problems etc. So it’s time that we look back at these factors and think of improving the work environment to reduce physical stress.

  • Stress: Interpersonal Demands

    In the last byte, we looked at role related issues that act as a source of stress. In today’s byte, we look at Interpersonal demands that act as a source of stress.

    We could look at interpersonal demands in the following categories:

    1. Emotional Toxins
    2. Sexual Harassment
    3. Poor Leadership
    4. Trust Related
    We quite sometimes find an individual with abrasive personality and a find a set of emotions like anger, guilt, shame, fear etc come in immediately. These emotions make us feel “ill”. These spread through the work environment and cause a range of disturbances – this is one potential source of work stress.

    Sexual Harassment is a gender-related interpersonal demand that creates a stressful working environment both for the person being harassed and for others. A vast majority of sexual harassment is directed at women in the work place is a chronic yet preventable workplace problem.

    Employees who feel secure working with strong, directive leadership may be anxious when handling an open management style. Those comfortable with participative leadership style will not feel comfortable with a very directive leadership. Poor leadership in organizations and excessive, demanding management styles are one of the leading sources of work stress.

    Trust is an important characteristic in any leader-follower interpersonal relation. This is the reason why in most cases, a slight threat to the reputation of the employee with her or his supervisor may be especially stressful! Diversity amongst the project groups could act as a hurdle in building a trusting relationship.

  • Stress: Role related issues

    In the last byte, we looked at how task related issues act as a source of stress. In today’s byte, we look at how role related create a social-psychological demand in a work environment and act as source of stress.

    We can classify role related stress into 2 categories:

    1. Role Conflicts
    2. Role Ambiguity
    Role Conflicts result from result from inconsistent or incompatible expectations communicated to a person. Role Ambiguity is the confusion of a person experience related to the expectations of others. Role ambiguity may be caused by not understanding what is expected, not knowing how to do it, or not knowing the result of failure to do it.

    We can understand Role Conflicts better if we can categorize the same. We can classify these into:

    1. Interrole conflict: is caused by conflicting expectations related to two separate roles. Example: an individual could be as an employee and be a parent. In such cases work-family demands could lead to stress.
    2. Intrarole conflict: is caused by conflicting expectation related to a single role. Example: A manager would press an employee to work fast and also deliver a high-quality work – this in some cases could cause conflict for the employee!
    3. Person-role conflict: is caused when an employee is expected to behave in a way that violates personal values, beliefs or principles. Ethics violations are one source of such person-role conflicts.

  • Stress: Task Demands

    In the last byte, we looked categorized the sources of stress. In today’s byte, we look at the first category of the source of work related stress – Task Demands.

    We live in a world of change. Globalization has ushered in dramatic changes in the way we work (to know more about the drivers of the most recent wave of globalization read – World is Flat). With change comes a lot of uncertainty – which for an individual translates to the lack of predictability in the daily tasks and activities. Some manifestation of these changes in the work environment could be – job loss, or underemployment, monotony and boredom at work etc. These create stress in the individual who is facing these changed scenarios.

    Technology (in a colloquial meaning – not the business classification we discussed about earlier) is an important driver of business, and this the change of these technologies only compound the problem further. The change in technology brings along with the fear of being outdated – while training, education and skill development are ways to address this to a certain extent; none the less the uncertainty associated would cause stress.

    While working, there are certain critical factors that we feel are important to be controlled – lack of control could lead to the inability to influence the timing of tasks and activities (and other similar problems) – and create situations that are difficult and psychologically demanding – thus increasing the stress associated.

    Invariably, everyone has a career aspiration and when one gets into a career gridlock (pretty common in the middle management level) it build us stress – this is further compounded by the time pressures one has to address to at work place.

  • Stress: Work and Non Work Related

    In the last byte, we looked at what happens to the body when it is stressed. In today’s byte, we try to understand the source of stress and continue the discussion as we move through the next few bytes.

    We could broadly classify sources or stress into 2 categories – Work related and non work related. These categories are from the context of the origin of the stress. Following is a summary of this classification.



  • Stress: Psychoanalytic Approach 2

    In the last byte, we summarized the various approaches towards understanding stress. Out of these, the psychoanalytic approach highlights the relation between the ego-ideal and self-ideal; it would be interesting to see how the body and mind would trigger a set of responses; this is what we discuss in today’s byte.

    The response to any stress situation is characterized by a predictable sequence of mind and body events. Broadly speaking, stress triggers the release of chemical messengers, primarily adrenaline, into the blood stream. These messengers activate the sympathetic nervous system and the endocrine (hormone) system. These 2 systems work together and trigger four mind-body changes to prepare the person for – fight or flight:

    1. the redirection of the blood to the brain and large-muscle group and away from the skin, internal organs and extremities.
    2. Increase alertness by way of improved vision, hearing, and other sensory processes through the activation of the brainstem (ancient brain)
    3. The release of glucose (blood sugar) and fatty acids into the blood stream to sustain the body during the stressful event
    4. Depression of the immune system, as well as restorative and emergent process (such as digestion)
    The combination of the above events, shift a person from being neutral or naturally defensive to an offensive posture.

    In some cases, the stress response could be very functional; it need not be inherently bad or defensive.

  • Stress: Approaches

    In the last byte, we looked at psychoanalytic approach. Just as a pointer to the discussion, it would be right to summarize the discussion on stress with the following diagram.