Startup cheatsheet(s)

How does one get information about building a startup from an idea in a particular geography? I read a lot of generic stuff about entreprenuership but still haven't come across , what I may call , a " startup cheatsheet" .

A cheatsheet, for the uninitiated, is a documentation of steps to quickly accomplish a task without understanding all the details. For a unix novice, it could be as simple as a set of commands to create a directory structure of required format. The steps you see on the printer dashboard when paper is jammed is another example of a cheat sheet.

Cheat sheets make life easier by saving time and effort on tasks where the result is guaranteed to be repeatable by following the steps. As I think today about launching a startup, I want to focus on two key areas : a) building the product/service and b) strategy for getting customers . I imagine everything else could be documented in a cheatsheet. This could include basic legal stuff, setting up the basic infrastructure like office, industry specific hiring strategies, promotions and so on. Sure, the startup's mandate would be to typically go beyond these but trust me , for someone who hasn't started one in a particular vertical in a particular geography, this kind of information would be a huge support mechanism.

Google checkout

Google checkout is a payment gateway offering by Google. For merchants, it offers easy integration and theoretically zero transaction cost if merchants spend 10% of sales money on Adwords. Without an adwords account, it costs 2% + 0.20 USD. This is close to or better than other offerings. It is totally free till January 1,2008.

It is available for merchants in US/UK only as of now but buyers from 140 countries can use Google checkout to buy products online.

These days, the most interesting page that you should read when using an google product is - privacy policy.

Sample this :

Transaction information - When you use Google Checkout to conduct a transaction, we collect information about each transaction, including the transaction amount, a description provided by the seller of the goods or services being purchased, the names of the seller and buyer, and the type of payment used.

Or this :

Google cookies - When you access a Google Checkout webpage, we send one or more cookies - a small file containing a string of characters - to your computer that uniquely identifies your browser. We use cookies to improve the quality of our service by storing user preferences and tracking user trends. Most browsers are initially set up to accept cookies, but you can reset your browser to refuse all cookies or to indicate when a cookie is being sent. Please note that you will not be able to access Google Checkout if your cookies are disabled

Google has had skirmishes with privacy issues in US. I think the issue of privacy has to be seen in the context of how confidential information is used. Customized ads suited to your preferences might be welcome to most online shoppers but people , especially in US, do not want to share private info with a third party. This is something Google , as a brand, will have to manage properly given its motto of " Do No Evil".

If you overlook privacy concerns, Google checkout looks like an admirable product allowing small businesses to launch online efficiently and quickly. I am waiting for it to launch in India where its transaction costs will easily be the lowest and the google brand will hopefully convince more Indian buyers ( worried about fraud/security) to shop online.

Online comparison, Offline shopping

CompareIndia , an online comparison site which I reviewed a few months back, has become much more comprehensive and interesting. I had mentioned how a lot of Indians would like to look up and compare products online and then go to a local retailer which offers the best deal for that product. This is exactly what is happening at CompareIndia. In addition, now they have user reviews, expert advice and product Q&A. You can also become an expert or write a review.

Revenue model currently seems to be hot deal ads by local retailers and google ads.

Disclaimer - I don't work for or have any sort of relationship with Network 18.

Do you know of other ventures working on this model? I am interested in finding out the price points of this advertising for small/mid-size/large retailers.

Innovating Venture Capital - A new model?

I came across this interesting article from IEEE which takes a close look at why VC's are traditionally risk-averse when it comes to true innovation. Although the article's scale of innovation is self developed and debatable, I agree with the gist of its analysis. Institutional investors chasing better than stock market returns would like these returns within a fixed time frame ( say 3-5 years) and with greatest possible certainity. They don't care about technology. This forces general partners to avoid risk and invest in startups which are riding the wave.

What if , instead of institutional investors, retail investors were roped in to raise funds? One way this happens already is the stock market, but to IPO a company needs to reach a certain level of maturity. Is it legally possible( in India, or in US?) for a private VC firm to raise money from retail investors for investment in seed/early stage startups?

I haven't done much analysis, nor am I a financial expert. But if you had invested 500 rupees in Bharti Airtel when Sunil Mittal was just starting , you can imagine how much that would be worth today. To put it in perspective, Warburg Pincus realized 1.6 billion USD from a 300 million USD investment they did in Bharti as late as 1999.

India's strength is in numbers. Delhi's population alone is 130 million , if you get 1 million to commit 1000 rupees as a one time investment you have a 1000 million rupee fund. How many seed stage startups can it sustain today at 1-10 million INR per startup? 100-1000. Let the fund make bold , but not stupid, investments which go beyond ecommerce and travel portals. Let the fund hire full time engineers to evaluate opportunities. The question is how soon those 1 million retail investors are looking for returns on their 1000 bucks. 1 year , 5 years or 10 years? I bet you could convince them to wait much longer than an average institutional investor. 1000 bucks is the key.

I know this is all in theory but the idea sounds intriguing to me on three fronts. First, retail investors get a piece of action in VC space. Second, seed stage funding is no longer a pipe dream.
Third, innovation gets a kick.

Do chip in with your comments.

Investing in research

Do you know how much India's software companies invest in research every year? Have you heard of Infosys research Labs, Wipro research labs or TCS research labs? I haven't. I bet they don't exist.

IBM and HP continue to transition into services based business models. This makes sense because corporates worldwide want to outsource complicated tasks like setting up and managing IT infrastructure. But both IBM and HP continue to spend billions of dollars annually in research ranging from microprocessors to storage technologies. You could argue that they are rich. But don't forget that TCS alone has a market capitalisation of 27 billion USD. So, money is not the constraint.

It is anybody's argument whether companies like Infosys have pockets deep enough to attract the best researchers from anywhere in the world. I think the problem lies in the mindset.

A decade or more of successful cost arbitrage based business model has made these companies think that services based business model does not require research. I do not have anything against the peanut pay model. ( Peanut pay : working for peanuts). India's strength is in numbers and we will continue to churn out software engineers by the millions. But does that preclude investing in research?

American companies invest heavily in technology research , either through grants to universities or setting up their own research labs. China is fast catching up, by providing huge federal funds to their universities. The thing with research is it rarely pays dividends in the short term. In the long term as well, unless a company has its own research lab, university research cannot be claimed as proprietary. However, good quality research helps every one in the technology business by creating a culture of innovation which benefits the risk takers. The T J Watson center of IBM research labs does outstanding research but not every project becomes a product. However , as a company, it gives IBM a definitive edge whether it is a new Service Oriented Architecture (SOA) or a new mass storage solution.

Indian software companies should re-think their strategies and start investing in research. By doing this, they will only help themselves in the long run.

Indian TV News : bad to worse?

For those who missed the point, here's latest story.

Uma Khurana is a teacher in a government girls school in New Delhi. Few days ago, Live India reported a sting operation where she was exposed as a flesh trade dealer. Worse, she was accused of converting girl students into prostitutes. I understand that the modern society , our Indian society included, is morally corrupt and most unexpected perversities can happen. And sometimes, they do happen. Even by my utterly low expectations, this news item came as a shock.

The latest reports say that the reporter is being investigated for framing Uma Khurana as revenge for her personal dispute with the reporter's friend. The girl shown in the sting operation was exposed as an aspiring journalist.

Live India is a Hindi news , err, newtertainment channel . Newtertainment = Perverse Entertaintment packaged as news.

The masses of India claim English as their own, but a vast majority watches Hindi news channels. This includes those in posh bungalows, the Jhuggi Jhopri clusters, the builder apartments , the small town folks, the urban pretenders and everyone you meet on the streets of North to Central India. The market is huge. The stakes are high.

If you ask me , I think the English news channels have also become pretty loud and trigger happy ( Sachin's retirement being the latest gaffe). But Hindi ones are a class apart. Not only are they loud,obscene, pointless and perverse, they may actually be promoting crime.

Code of conduct, anyone?

The English Fallacy

Wikipedia ranks India as Number 1 in the list of English speaking populations with about 350 million people able to use English. I am deeply suspicious of this number. Infact, I am filled with disgust since this is yet another number disguising bitter reality.

Sample this :

hello sir iam a.**** i complited my b.tech and iam starting an industry and i want to join our party at the same time i want to meet our head ******* sir how can i get oppintment pls replay me

Humans , particularly Indians, have a tremendous ability to adapt and this trait should enable you to understand the true purport of the sample above. If you still don't , email me.

I got this message through a social networking website popular amongst young Indians. It is not the first time I have witnessed such radical use of English syntax and semantics. I have a feeling it won't be the last, either.

Numbers are what make Indians proud these days - be it demographics ,GDP or the sensex. But beyond the euphoria, one must take a deeper and closer look at quality.That is, the quality of English being spoken by the Indian masses. There are deep-rooted socio-cultural factors at play here. English has made the leap from the lingua-franca of the Indian elite to that of the Indian masses. About 350 million of them, to be precise. But the problem is not many of those joining the league want to accept that their English is not only imprecise, it is precisely defunct. They don't accept this shortcoming because it is "uncool", almost an embarassment in their social circles. These are the kids who never learnt English properly in their primary schools , mainly due to teachers who were incompetent. You will be surprised to know how many of the private school kids cannot speak or write correct English. These are the kids who will get found out , and will lag their peers by a margin.

Does it matter? I think it does. The services industry has been complaining for a while about employability of college graduates. A lot of it has to do with basic spoken and written English. No body wants Byrons or Shakespeares. But atleast ,pretty please, can we get the spellings right?