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Tag: #bookchapter

  • Digging too many small wells?

    The entrepreneurial journey is challenging and uncertain. It is natural for the entrepreneurs’ mind to feel tired with the grind. Subsequently, it tries to restore balance in multiple ways. Like we discussed earlier, some of them use motivational videos to get over this challenge. In some other cases, we find the mind taking up a different mechanism to restore the balance, which it seems to have lost.

    In this mechanism, the mind continues to think of alternate ideas. Maybe thinking of different solutions gets the mind to think it is doing some useful work and therefore feel better emotionally! These ideas could be in the same domain as the initial idea the entrepreneur was working in or could be in unrelated domains. But the essential aspect of this process is that the entrepreneur seems to exhibit higher creativity and generate multiple ideas.

    Ideas being ideas do not die away. It is natural for the entrepreneur to continue playing with these ideas. When the progress on one idea is slow, the entrepreneur may pick up another idea that was just conceptualized and begin engaging in the hope of building it. However, it’s not easy to keep the balance between these ideas.

    The mind may interpret this behaviour of the entrepreneur as a justification that it is ok to lose focus on one and jump on to another. Some entrepreneurs keep up the balance and their priorities clear; they continue to engage on one primary idea and keep working on the other only when there is a substantial waiting time due to some expected responses. The minute they get the response on the primary idea, they reroute their focus on it, and secondary ideas get suspended. In this manner, they may actually be able to develop multiple ideas.

    We also find some entrepreneurs who are active in secondary ideas rather than their primary focus area. You will find them telling you about multiple ideas and what they are developing on these ideas.  This way, you are more likely to dissipate your attention and spread resources across multiple ideas and not understand why a specific idea is not making progress. Troubleshooting would take the second fiddle, and almost no learning is appropriated by the entrepreneur.

    As an entrepreneur, it is normal to handle multiple ideas and develop them when you manage time. Losing focus is a real danger. You may end up digging multiple wells, each of 10 feet depth and not find water, in any. Instead, maybe you should concentrate on digging one well deep enough, say  100 feet, where you are more likely to find water.

    Ask yourself:

    Do I have multiple ideas which I conceived while the primary idea was moving slower than anticipated?

    Am I still keeping the priority among ideas clear? How do I handle and resolve the conflicting demands within ideas? Am I simply drilling multiple small wells? Am I dissipating my energy or am I able to handle this drilling process better?

  • Communicating the concept. Don’t miss the nuance!

    As entrepreneurs begin working on their venture idea, they must communicate their offering and the underlying value to potential users/customers. How well your potential users/customers/investors understand you and your ideas purely depends on how close your communication is to the language they understand and how they see the world.

    By language, we do not mean a spoken lingo like – English, French, etc. It is the vocabulary and its variety to highlight conceptual distinctions, that we are talking about. The vocabulary of a specific group of people would differ from another.

    Taking the following example may help clarify the underlying message. Let’s say you are speaking to a physics scholar and then go to speak to a management scholar who studies cognition. Let us assume you use the word ‘inertia’ in the conversation. For the physics scholar, the meaning would be related to physical objects. These objects would not be set into motion due to the resistance they have been in the earlier state. You need to apply a higher force than the inertia to get it moving. When speaking to a management scholar who studies human cognition, the word inertia would mean something totally different. In this particular context, the word ‘inertia’ means that the mind is lazy to think; it does not change its patterns of thinking instantaneously and requires effort by the individual to shift the thinking pattern.

    Similarly, when you speak with your potential audience, you are more likely to trigger thinking patterns based on their world view. The vocabulary they use and the meaning associated with these words are reflective of the different categories of ideas they are accustomed to thinking. The closer your understanding, the more likely it is that you can trigger the right mental category and thus have a more fruitful engagement.

    It is logical to ask next – how do we know if this vocabulary is different? If you observe and listen to their conversations regularly, you are more likely to spot these. In some cases, you may have several words to reflect very similar concepts. For a commoner, it is hard to understand the differences between the various words. However, if you pay attention, you begin to realize that these words, while referring to similar things, highlight the nuanced differences which are important to refer to for specific details. [Trivia: Did you know that Eskimos have over ten words to refer to different forms of snow! There is no word in Kannada to refer to snow!]

    A word of caution here, startups try to use analogies to communicate their ideas. Like if someone calls themselves ‘Uber of Photography’, this could trigger a very different expectation in the audience’s mind. Know clearly how your audience would begin thinking of the analogy. Watch out what you trigger in your audience, do not ignore the nuance.

    Ask yourself:

    Do I understand how my audience thinks?

    Have I gotten to understand what is important to them and how they communicate it? Have I stitched together the questions they ask to be able to understand how they are looking at what I mean? Can I make it simpler for them to get my pitch right?

  • Where is the game being played?

    In his book Zero-to-One, Peter Theil states that if big entrepreneurs of yesteryears are to restart their business today, they will not do it the same way. So, it is useless to simply pursue opportunities of the yesteryears or look to develop a solution from that era. In doing so, he subtly points to the nature of disruptions that an entrepreneur would need to introduce.

    Take the popular case of Tesla. If you are to ask what is the crucial element that Elon Musk did being at Tesla, which made it a relatively popular company that Chetan Maini did not do despite being the pioneer with the REVA car brand for so many years? One could claim that it was played at a different level.

    While Maini has been a pioneer on many fronts, identifying technological challenges, overcoming, and developing the electric four-wheeler market, there were many reasons why the product did not take off the way Tesla did. Of the many factors, one factor to consider is the way Musk played the game.

    Musk did not just project the solution as an electric vehicle. Nor did he use it to appeal to the green loving audience alone, given the personality and the eccentricity that Musk carries, the game was played using the media. Every single model that was developed was well covered. Bottlenecks that were identified were addressed and talked about in public. Musk’s influence is so huge that most of the electric vehicle manufacturers in India today have been inspired by his personality and want to be part of the EV revolution.

    On similar lines, in the early days of the mini computer industry, there were many variants of components that would come into the market. Often one is not able to speak with the other. Some geeks who understood how to rig up a board with the appropriate components would make their own computers.

    It is in this context that Apple made its entry. The integrated design emphasised by Steve Jobs, allowed the computer market to move away from hobbyists and geeks to a mass market. It attracted people who sought to simply plug and play their device without having to know what is inside. You don’t need to go scouting for hardware components, and then install the necessary software.

    However, Apple’s integrated designs came with its own closed system – and worked with only a provided set of software that Apple allowed to be pre-loaded. The introduction of IBM-PC and clones architecture gave people more options. A number of software could now compete and work on the same hardware standard! And you as the user had the choice of what you would install and not!

    Every industry comes in with such phases of innovation and disruption. One could look for patterns at how entrepreneurs intend to disrupt and, at the same time, solve legitimacy challenges to face a new category of products.

    Ask yourself:

    Other than product-related technical challenges, what factors on the market front would need to be addressed? How should these non-technical challenges be addressed?

  • Centrality of observation and learning

    Earlier on, while discussing the idea, we looked at the effect of framing a solution from a situation we encounter. A similar bias is observed when we begin picking up problems to develop solutions. We may simply claim the existence of a problem without being sure that the problem exists for the end customers/users. You may be calling it – a problem, a pain-point, a need, or a want. But the question you need to answer is about understanding the problem.

    A typical example of this is, the number of entrepreneurs who walk in and say; I have had issues comparing the product features and prices across different online e-commerce stores and hence will build a web-scraper and a comparison tool to solve the problem. This broad definition of the problem is often not useful for getting to the crux of the problem you are trying to address.

    Invest time in narrowing and understanding the problem a bit further. Ask if this is a common problem, and if so, to whom and when. How frequently do these problems arise? You may find this important to consider since you have already assumed the behaviour of the user. That is, the search behaviour of the user is pretty frequent. Is it as frequent, for you to make it a problem worth solving? Or was it the excitement of learning the new technology that played a major role in you claiming that the problem was significant enough to solve.

    Building on the same logic, we find Trivago, Booking.com, or Makemytrip.com to have developed their businesses. The frequency and behaviour of the customer/user play a crucial role in defining the domain to operate it. People often commute and make decisions about staying. Factoring in the behaviour makes it easier and less cumbersome to search, evaluate, and decide the key problem that is being addressed. It is not just the search!

    Next time you think of a problem – observe it closely. Who, when and where is experiencing the problem? How are they solving it now, can you build a solution which makes the transition to your solution intuitive and easy? So, don’t rest once you have thought of a problem. Study it and break through the framing trap you may fall into through your imagination.

    Ask yourself:

    Is the problem I claim to solve real?

    For whom is it useful? When does the need typically occur? How is it being addressed now? Could I develop the solution alternately to what I have imagined already?

  • Idea and Actors around you

    A useful starting point is to identify the relevant social actors you need to onboard once you have narrowed down on the venture idea you are interested in and have a tentative idea of the resources you require.

    The commuting problem we discussed earlier – if you choose to go with developing a satellite office model as the solution to the long commute time, you will need space for employees of various companies to work. Here too, you have a few choices to make. One way is to think of the following means to execute – you could find the relevant spaces from builders, negotiate a rental agreement, and create separate seating and office space for employees of different companies. An alternate is to think of partnering with existing co-working spaces for infrastructure, which they would have anyway invested in it, isn’t it? And you focus on providing the secure underlying network to enable the feeling of working from these distributed offices almost seamlessly!

    In the two approaches, the nature of actors you needed to onboard were different. In one case, the builders were the vendors to ensure that the interiors, the power backups, etc. are all taken care of. In the other approach, you have partnered with co-working spaces. The effort is simply directed towards on-boarding interested companies, selling them the value.  At the same time, the issues of infrastructure are negotiated with someone who is already in the space, and the existing asset is used within limits, if not with any customization.

    It is thus useful to look at the idea in the light of the various social actors you intend to onboard. First, brainstorming about the various options by considering different combinations of actors would highlight alternatives that are possible paths to reach the same end goal of developing the business. Additionally, you can go a step further and establish connections to those social actors you do not have a direct link to. Still, by asking your existing set of connections, you might be able to reach them.

    Speaking with this variety of actors will also make it possible to identify and break the resource access issues in a more granular manner. This allows you to potentially stitch together what other social actors are willing to give as an affordable loss and eventually build your business!

    Ask yourself:

    Have I identified the different social actors who may help me build the venture?

    Is there an alternate set of social actors who may help me achieve the same result as I want?

    What is it that each social actor is willing to commit without overthinking?

    Can I stitch together these commitments from the social actors to accomplish the goal? Is it possible to gain indirect access to these social actors if I don’t have direct access?

  • Business Model Choice

    A business model to be adopted for the venture idea is an essential choice that an entrepreneur has to make. In most cases, however, this choice is not thought through. Business models are an abstraction of how a specific venture engages with various actors in its ecosystem. In essence, it emphasizes the choices and the activities performed in creating value for the various actors. Despite its importance, entrepreneurs imitate a business model from a different domain, for their own business, without enough application of their mind.

    To simplify the choices, it is vital to understand the nature of business prevalent today. We could classify most businesses today as either pipeline businesses or platform businesses. A pipeline business is built along the traditional supply chain from the source of resources upstream to the end consumer downstream. For example, consider iron ore being mined at one end, then sent to the mills to be converted to steel, which is then taken to the construction site as one of its uses. Platform businesses, on the other hand, act to facilitate multiple entities to transact at a single place. A typical example would be the traditional marketplaces, where sellers dealing in different commodities, aggregate at a single place from where buyers/customers come to purchase the various commodities.

    Choosing a platform business model requires the entrepreneur to focus on multiple entities that need to be engaged to create and capture value. The reasons why each of these entities would be part of the platform becomes the central question. Subsequently, one needs to engage with various means to onboard the different entities. For example: if you are starting a cab-aggregator service – you would need to engage with both the cab-providers and the cab-users simultaneously. Only onboarding either of the two sides would not be enough for the other side to pick up. Further, one would often need to incentivize behaviour that would increase the use of the platform and iron out the various glitches that one may encounter in the usage of the platform.

    If one were to think of a pipeline business model, it would begin with positioning the business at the right place in the existing supply chain. You could choose to be at the retailing end of it or move upwards in the chain and engage at the raw resource stage. The position in the existing supply chain of the industry you operate in would give answers to the next level of business model choice to be made. In this case, the choice of the business model can be specified with the nature of the entity in the pipeline you are dealing with, as the consumer of the value – businesses, government, or individuals. When the venture creates and delivers value for another business, it is business to business (B2B); business to the government is (B2G); to individuals, it is business to customer (B2C).

    The above discussion should give one clarity of where, what, and how you would have to engage with the venture you intend to build. However, the next choice is to identify the subservient choices one would need to do in building the venture. We will explore this further in the section on canvases.

    Ask yourself:

    Have I chosen the right business model to generate and capture value from the business I intend to start? Or am I merely imitating a business model without applying my mind to it? Do my assumptions stand the test when I think through the venture idea and the business model I have chosen?

  • Ideas– Understanding the Audience

    Ideas are a dime a dozen! This is clear from the earlier discussion. Now, in addition to the role of framing the situation discussed earlier, are there certain patterns that we spot in the way entrepreneurs think of the idea? Definitely!

    Most ideas we receive are thoughts from the user or consumer perspective. The product or service offering, that is being imagined is addressing a specific pain of a user or consumer. This is so for two reasons at least. First, if you are the user of an offering, do you have reason to feel unhappy about using it in some way? Also, there would be others who face the same problem and a quick discussion with them would confirm this. Second, even if it is not a first-hand experience of the problem, a detached observation of a few challenges is enough to trigger potential solutions, when we begin racking our brains.

    Embedding the problem in its context makes it easy to generate solutions for users. However, starting a business making this solution the central aspect is not enough. One would need to step away and ask – who would pay for solving this problem? Is it the user/consumer himself? If that is the case, it is a great way to get to doing business. However, it’s not often the case and the customer needs to be thought of as distinct from the user/consumer.

    In addition to this, we also find it easy to spot users of the potential solution, but spotting customers – a group of people who would pay for the customized offering is relatively challenging. An example of this is the way we use ‘internet search’ today. Almost everyone today searches for a variety of information on the internet, and the number has been growing. If people were to pay for the search service, the present-day search behavior would not have been formed. This is despite a large number of people searching! To make monetization possible, the search engine providers have had to rely on alternate ways to generate a revenue stream for the business.

    These customers may not aggregate at one place and even if they do aggregate, reaching them when they are experiencing the issue becomes important. If you can do both – what would be the cost of converting each customer? Can you do it on a scale? A case in point here is the story of a mentor at NSRCEL who built an on-demand tech-support service for computers in the late 1990s. With the relatively low penetration of computers, it was difficult to find potential customers in one place! And with those who had a computer, it was difficult to be remembered when the issue was raised. Our mentor devised a simple solution to overcome the challenge – a sticker. This sticker would be stuck on the side of the device he would have serviced, or on the telephone!

    Finally, it may be easy to develop ideas thinking about the user/consumer. However, customers are central to the creation of the business too. Given that customers pay the money, it is ensured that there is cash flowing in, and your offering is being sold. It is now time to begin focusing on your business, don’t leave it to the end.

    Ask yourself:

    Am I merely thinking in terms of users/consumers?

    Who would pay for the solution offering that I intend to create? Are they distinct from the user/consumer?

    What is the cost of converting a customer? How do I begin thinking of solving the business challenges at scale?

  • Ideas are a Dime a Dozen

    For many people, it might come as a surprise that an idea, among other important parameters to succeed at venture building, ranks as one of the lowest. This does not mean that an idea for a venture is not important, but that it is superseded by the complexity of the venture building process.

    Here is a simple thought experiment for you to test this:

    If you are a daily commuter in Bangalore, spending hours together in traffic jams on the streets is something you would inevitably encounter. Consider this as a problem you intend to solve and take a minute to list down the different solutions you would think of, to address this problem.

    When this problem was addressed in a public forum of a group of aspiring entrepreneurs, the typical answers we heard were – creating satellite offices, enabling better internet connections to allow people to work while they are commuting, better public transport, etc.

    Do you see how easy it is to generate an idea? And if ideas are easy to generate, can we generate many? Yes.

    The above thought experiment should let you know that as ideas are so easy to generate, it is not at all the most important component of your venture building efforts. Do not fret over the ownership of the idea. The secret of a successful venture building, lies not in the imagining of an idea, but in the execution of it.

    What if one were to take the same situation and frame it differently?  Let us take another scenario. A tired employee wants to feel refreshed and engaged while commuting in the horrible traffic. Immediately, you begin thinking of solutions that have a higher entertainment quotient in them. These ideas may consist of streaming movies or setting up individual games, or extending it further to collaborative multi-player games.

    There is another aspect of human thinking visible here. If the problem is framed differently, a different set of solutions come to the fore. The questions, as a creative individual that you need to ask about the situation then are – How are the situations being framed? Could there be any alternate frames of looking at the situation?

    In both the above exercises, you would have realized that ideas often take the form of a solution to a specific problem. However, this solution is an imagined one and captures within itself the product-service or a combination of these offerings. The venture to be built has this offering, but also includes the potential market for this offering which serves the means to get to these markets. When these dimensions are incorporated, we shift away from merely having a product or service idea to having a venture idea.

    Ask yourself:

    How are you framing the situation? Could there be alternate frames to look at the situation?