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I think there is a lot of potential and hope, especially now, for founders to start online (only) services businesses. Indian consumers seem to be opening up to paying for online B2C services, where purchase and most fulfillment is online. This trend is a natural outcome of India’s increasing online population (>125M now) and familiarity with online as a channel (20M bought online in last 12 months, 7M of which were non-travel). Barring a few exceptions noted below, this space has historically been challenging but I hope to see that changing in future.
Successful examples of existing online services in India include matrimony (Shaadi and Bharat Matrimony) and also aggregators across categories like travel (rail, air, bus), movies and mobile phone recharge. While the aggregator segment has been more successful because of direct linkage to offline services, it is relatively less interesting (and more capital intensive) because of low absolute margin per transaction and dependence on offline delivery for scaling versus a service which is purely digital in nature.
Subject to a large potential paying consumer base being available, pure online services are fundamentally very attractive to entrepreneurs and investors because of:
- High capital efficiency (high gross margins).
- Become disproportionately valuable (given B2C/branded nature).
- Ability to grow quickly, since they are not constrained by offline buildout (not applicable everywhere).
Here are a few examples below in categories where we are anecdotaly seeing early growth in new online consumer services:
- Education: Online higher education, Online certification and Test prep (very nascent) are showing that consumers are willing to pay and consume online.
- Jobs: Linkedin’s Premium Membership, ABC’s Head Honchos and Naukri’s premium services are showing early signs of monetizing through consumers.
- Apps: Evernote, Apple iTunes/App store and Google Play are monetizing on an Indian user base – this could be a massive trend given the rate at which smartphones and mobile data users are growing.
- Financial Services: Previously, the web was used primarily for lead generation. Now, certain types of insurance (Auto, Life, Travel) that are delivered end-to-end online are gaining traction.
- Auto: Classifieds for used cars
It is still early days for these trends – but I hope that the growth continues. If you know of other online categories or businesses which are getting traction, I would love to learn about them – please add to the comments section below.
PS: While mobile operator value-added services (MVAS) is a great example of online services, in my opinion, these services have not really been B2C. As a result, I am not including MVAS in the list above. My list also does not include businesses which collect revenue from offline vendors (e.g. Zomato) or have large offline delivery responsibility (e.g. goods ecommerce).
[Published on NextBigWhat]
Your board should be an asset to your company, providing guidance and advice at critical strategic junctures, as well as functionally helping with executive recruitement, M&A and other liquidity options, and key strategic outreach into regulators, distribution partners, suppliers and customers.
In my opinion, the smaller the board, the better. When you start out with your company, perhaps there are one or two founders and an independent on the board, for a total of three. I have seen most boards at about five and some at seven to nine members. Six or above, in my opinion is too big and unwieldy to make fast and correct decisions.
In all the hubbub of starting and growing a company, it’s easy to overlook the creation of a strong and value-added board. Most times, the board consists of management (initially founders) and investors and remains that way for quite a while. But it can be even better.
I’ve seen independent board members help out a fair amount. So whether it is an empty seat set aside for an independent or no seat at all, I would recommend getting somebody onto the board soon. And constituting an ‘advisory board’ doesn’t achieve this purpose.
Some of the roles I’ve seen independent board members play are:
- helping resolve complex and difficult situations or stand-offs between the CEO and investors.
- providing a balanced perspective when management and investors may have drifted into extreme positions
- working closely with the CEO outside of board meetings to provide specific deliverables back to the board (eg compensation proposals)
- provide a sense of real perspective from a long and successful career in their industry
- serving as a mentor and guide for the CEO to enable the CEO to learn and grow in his or her role as a leader and manager
So, who should your independent board member be?
- Should have strong rapport with the CEO and not be just a ‘yes man.’
- Should ideally have a point of view/relationships/experience in an area that is currently under-represented in the senior team
- Should have a financial interest in the success of the company. Ideally would have invested their own capital into the company
- Has time to spend for board meetings and outside of board meetings with the CEO
- Is genuinely interested in seeing the CEO and by extension the company succeed
Some good posts & examples:
- From Brian Halligan of Hubspot: The Benefits of the Perfect Independent Board Member
- From Elad Gil: How to Choose a Board Member
- From Matt Blumberg of Return Path: Why I Love my Board
Have seen you seen independent board members play other constructive roles? Please let me know in the comments section.
[Also published on Yourstory.in]
Earlier this week, I was invited to mentor the GSF Accelerator’s startups on Pitching & Investors Decks. I thought I’d summarize what I said there.
I certainly don’t claim any special knowledge on what makes for a good first investor presentation. There have been many books and blogs written about this. However, I’ve seen hundreds of investors pitches over the past several years of coaching CEOs on IPO roadshows, raising capital as a founder and listening to pitches as an investor. Heck, I’ve even been involved with investing in the leading presentation sharing company - Slideshare - which has helped accelerate a trend toward storytelling in presentations.
The first meeting is not about getting investors to agree to invest (although perhaps it is when you are looking at angel/micro-VC funding). The key is to start to develop the relationship and get them excited enough and intrigued enough to want to dive in deeper in a subsequent meeting.
You can greatly improve the odds of having a productive first meeting by telling a compelling story in a concise and hard-hitting manner. Make it personal. Hit the main high points first to generate and assess interest. Then provide backup to your claims to cement the story.
Click here to see the 4 key slides (on Slideshare) that you need to nail.
After these four slides, stop and assess your audience by asking them what they think, their key concerns etc. You should then be adept enough to address these concerns as you continue with the familiar series of slides on traction, product overview/roadmap/differentation, market sizing, business model, go-to-market, financial projections and funding requirement & milestones. Finish by showing the Investment Highlights slide again and summarizing the key points. Leave this slide up while you go through any final Q&A with the investors.
Some other guidelines and pet peeves:
- The point of the slide should be the title of the slide e.g. don’t say “Team” as the title of the slide. Instead, say “Extensive Team Experience in Adtech” if you are doing an Adtech startup.
- The meeting is not about reading out the presentation, it’s about your conversation and engagement with the investors, with the presentation as support material.
- No more than 2 minutes per slide. I’ve seen 30 minutes spent just on the first slide where the whole pitch is given with that one slide.
- You should be able to run through the presentation by yourself in less than 30 minutes.
- Place yourself between the investors and the projected or laptop-based deck. Otherwise you’ll have the tennis match effect of spectators swiveling back and forth between the presentation deck and you.
- Don’t leave the meeting without asking investors: “What do you think?”, “What are your main concerns?”, “What did you like specifically?”
- Know what your investors have invested in or said about your space before you meet them. The Web is your friend.
- Please don’t take the slide deck I’ve embedded above as an example of the colors, fonts or layout that you should use.
[Also published on Startup Weekend Delhi]
Founders start companies for many reasons. They want to build something useful. They have identified a specific pain point in their personal or professional lives and the status quo causes them pain. They have analytically spotted a specific business opportunity. They are inventing something that is a leap forward in their industry or disruptive in general. Or perhaps, they see everybody else doing the same thing and want to jump on the bandwagon!
No matter how small or big the initial idea is at startup, the best founders step back and ask themselves what the high-impact success scenario is for them and what the purpose and vision of their project is.
Yet, why is it that, time after time, many founders fail to communicate this high-impact scenario and sense of purpose and vision? Time after time, the first words uttered by founders to the press or investors or recruits is what they did in the past month or the recent milestones that they have hit or the numerical goal they have in mind. I believe these things are necessary, but not sufficient, to drive a company to high-impact greatness.
Having been a founder myself, I know that the day-in and day-out focus on getting things actually done (considerably higher friction in India than in many other countries) is all-consuming (and appropriate). Yet I think it falls on the founders and management team to have a deep sense of purpose and vision and communicate that to the whole company, through words and through translation into what-does-it-mean-for-me for their team. And I believe this translates into better decision-making and execution through your startup.
My goal with this post is not to drive you to spend a bunch of time creating vague marketing-speak vision statements like “Invent” or “The best technology services provider in the world” or “The largest ___ in the country.” My goal is to drive you to think through your high-impact scenario and actively drive toward it with a vengeance.
So, consider the questions below early during the life of your startup and perhaps weave the answers into your execution as well as the (hopefully reality-based!) story you communicate to your stakeholders, whether they be the press or investors or recruits or regulators or others:
- What is the purpose of my startup and how does this connect to the impact I want to have?
- If my startup achieves its purpose and vision, how will my industry or people’s lives have been meaningfully impacted?
- How do I work backwards from this purpose and vision to instantiate a specific execution plan?
- Why is my team the best team to deliver on this vision? If not the best team, how do I build this purpose-focused team?
Here are some purpose/vision statements that resonated with me. And lest you think that these are just purposes dreamed up after the companies had succeeded, please think otherwise. These companies had this in mind from day one.
“Our mission is to connect the world’s professionals to make them more productive and successful… Our solutions are designed to enable professionals to achieve higher levels of performance and professional success and enable enterprises and professional organizations to find and connect with the world’s best talent.” ~ LinkedIn Annual Report
- Indian Energy Exchange (a Lightspeed portfolio company):
“We envision an India where the quality of life of the common citizen, rural or urban, is not compromised as a result of power shortages. We indeed envision a power-surplus India and a concomitant healthy competition in the electricity market for the ultimate benefit of the consumer, domestic and industrial… We will help accomplish the above vision by providing the nation with – and enhancing the utility of – our robust, scalable, and customizable electronic trading system with integrated solutions for trading, clearing, risk management, surveillance and counter-party trade guarantee.” ~ IEX website
“Several years ago, PayPal pioneered a new method of person-to-person transactions. Square takes this to a new level of personal accountability by enabling card present transactions with known payers. This is the next step in the cashless society.” ~ Jack Dorsey speaking