Blog

14 Jan IOT: The basics

Today, more people live in cities than in rural areas. There are no signs of a slow-down in urbanization; in fact it’s only speeding up. With many a problem to solve, and a population of 356 million between the ages of 10 and 24 (according to a UN report), the world’s largest youth population should be encouraged to make use of these favorable circumstances.

What is IoT?

The Internet of Things (IoT) is the network of physical objects that contain technology embedded within which enables them to communicate, and sense or interact with their internal states or the external environment. A simpler definition: IoT is where different objects of your world are connected and controlled with the help of the Internet.

The IoT Ecosystem

There are hundreds of companies worldwide developing technologies and solutions to meet the needs of smart cities. For instance, dozens of companies are working to provide more efficient lighting and traffic planning to help pedestrians and drivers by computerizing those systems.

Other IoT startups and established household names also work to provide solutions for cities both on macro and micro-level. Phillips, launched Lumimotion, a sensor-based lighting systems that is activated based on data collected from street activity.

Startups should keep these things in mind while building their IoT business:

  1. Seamless on-boarding experience: communication between devices should be so simple that requiring a connecting would not be necessary. Integration should be kept as simple as possible.
  2. Understanding IoT: One reason for the relatively slowly adoption of many IoT-based tools and services is that it is hard for consumers to understand how the solutions work. Visualization will play an important role in helping consumers understand what IoT streams of data mean and how to react.
  3. Support Multiple Devices:

IoT solutions should be optimized to function across different devices as most people have more than one device.

  1. User-friendly Systems

Although we’re talking about complex systems here, effective IoT tech should be managed by just one user-friendly control center.

  1. Security

Both established companies and emerging IoT startups must take into account security measures when looking to market their products.

Disruptive IoT technologies have the power to be applied to seemingly unlimited devices and appliances. Moreover, to truly meet the demands of a growing urban population competing for limited city resources, IoT has a huge role to play in transforming the way people experience urban living, from their homes, to the office, to everywhere in between. It will be interesting to see how this technology evolves to provide sustainable answers to pressing urban issues.

Read More

14 Jan EXIT STRATEGIES for STARTUPS

The sooner you start planning your exit, the more rewarding it will be. Exits require considerable planning. In this article, we will discuss the exits strategies available to you.

Initial Public Offering (IPO)

In an IPO, you sell a portion of your company in the public markets. You and your management team typically remain in place for a period of years, your investors and managers may be able to sell some stock, and your company continues to operate largely as it has in the past. However, your company will be subject to additional regulations, and institutional investors will scrutinize your quarterly performance.

Merger & Acquisition (M&A)

This means merging with a similar company, or being bought (acquired) by a larger company. This is a win-win situation when bordering companies have complementary skills, and can save and capitalize on each other’s resources by combining. For bigger companies, it’s a more efficient and quicker way to grow their revenue.

A strategic acquisition

In a strategic acquisition, another company purchases your business, either with cash or stock in the acquiring company or with some combination of stock and cash. The acquirer may or may not retain you and your management team, and may or may not make substantial changes in your company’s operations, staff, and business lines. The benefit is typically liquidity because if you sell the company to a strategic acquirer you might be able to sell most or all of your stock. The disadvantage of this exit strategy is that you will lose operating control.

Sell to a friendly individual.

This is different from an M&A. You are seeking to “cash out”. This way, you can pay our investors back. The ideal buyer here is someone who has more skills and interest on the operational side of the business, and can scale it. 

Cash cow.

In a stable, secure marketplace if your business has a steady revenue stream you can pay off your investors, and then get someone to run it. Usually, entrepreneurs who do this, have the next great idea to work on. However, you will still retain ownership via a certain percentage of the company.

Liquidation and close

You might reach a stage in your startup journey that you decide to shut down the business and liquidate. This could be because of natural disasters or a collapsed market.

How to Choose an Exit Strategy: Considerations in Choosing an Exit
Different people start companies for different reasons, and that can influence their exit strategy. The right exit strategy depends a lot on the objectives of the people who own the business. Initially, the founder(s) own 100 percent of the business. If they take on investment over time from venture capitalists, angel investors, equity investors, or individuals, they usually give up a portion of the company, or shares, and those shareholders will have a say in any potential exit strategy.

The following are some of the things to consider when choosing an exit strategy:

1. Do you want to continue in the business? In an IPO or a management buyout, you and your team will play much the same roles before and after the transaction. In a strategic acquisition, the acquirer may replace you and your team with its own people.

2. What are your liquidity needs? Many business owners view their exit strategy as a chance to increase their personal liquidity. In an IPO, for instance, your shares likely will be subject to a share lock-up agreement, and you will not be able to sell your shares — even after the IPO for a certain period of time. A strategic acquisition will often generate an immediate cash payment, thereby increasing owner liquidity. In a management buyout, the original owners will receive liquidity over a period of time.

3. What are the current market conditions? Demand in the market for your company’s products or services, the IPO scenario etc. and other market conditions will impact your exit strategy.

The purpose of an exit strategy is planning how to optimize for the future, rather than get out of a bad one. This will allow you to focus on building a startup that will be more attractive to acquirers or buyers in the long run. Think of an exit strategy as a successful transition.

Read More

14 Jan Why Competition Is Good for your startup

Competition drives businesses. Without competition, businesses will not grow or innovate. Your competition may be huge MNCs or other startups, but competition is essentially what drives you to do better. Here’s why competition is good for your startup:

Competition spurs improvement

Competition inspires businesses to improve themselves. Competing amongst each other is great initiative for each other to do better and stand out from the rest.

Competition provides a yardstick

Competition can be a measurement tool, and you will see clearly who is leading and who is not. There are many different metrics that allow businesses to compare themselves to others in the field. For you to constantly be relevant you will have to measure yourself against your competition and see what you’re doing right or wrong. Research their business model, their marketing channels, and their core customers. What can you provide the customers that they can’t?

Competition makes you learn

Competing in a crowded marketplace, you can learn from your competitors’ mistakes. Adapt what you learn to your business so that you can save time and money.

Competition encourages innovation

A startup that is disrupting the market forces other business to innovate. Businesses that cannot adapt and innovate to keep up with the changing trends ultimately lose in the market. For example, uber dominates the cab aggregation market.

Validation.

Competition helps you validate your idea. Anything that can be done already has some sort of company doing it. The more the competition, the more the opportunity.

Keeping you on your game.

A competitive market is what drives capitalism. Competition drives startups to be the best that you can be. It takes you out of our comfort zone and forces you to create better products and services. If you do not continue to make things better, you are not innovating. The failure to innovate leads to obsolescence. You should be constantly on the lookout to better your products or services.

Example: Dropbox’s Drew Houston knew that cloud service providers like BOX existed and already had huge traction in that market. Google also announced its cloud services. Yet, he still had a vision of making cloud services simple and easy for everyone. He created DropBox and his personal net worth is now estimated at $1.2 billion.

In conclusion, it is necessary to embrace competitors. Competition keeps you on your toes. Competition is not necessarily a bad thing: competition has driven many startups to become better. Many businesses get jaded, comfortable with the status quo, thinking it impossible to innovate. Competition forces you to innovate and thus stay ahead of the competition.

Read More

14 Jan 7 Tips For Healthy Cofounder Relationships

  1. Define the Relationship

A solid co-founder relationship depends on how clearly you have defined your roles. It is important to make sure all co founders are on the same page about whose roles are what, and who will take responsibility and ownership for which aspects of the business, and have authority over them. All these should be documented on paper.

  1. Stay focused on your own projects

 Co-founding a business comes with many responsibilities and a lot on your plate, it can be easy to get distracted and lose track of what’s important. There are many things you need to do, and you have to focus on your core responsibilities. Focus on your own tasks and don’t worry what your co-founders are doing.

  1. Agree to disagree

 All the co-founders should understand that it’s okay to disagree about certain things and have a rational argument where you can voice your opinion even if it opposes that of the other founder(s). The best ideas often come from differing opinions.

  1. Address issues

According to Richard Branson, “there is no better way of sorting out a difference of opinion than with a good-humored, strong debate — and maybe a stiff drink or two!” Sometimes you might reach a stage where you really cannot agree with each other. The key to solving these issues is communication, understanding the conflict and resolving it, and reminding yourself of the big goal ahead, to put things in perspective.

  1. Time

You should spend some time in getting to know your founder before starting up together. This will help you both understand what kind of relationship you will have working together. You can investigate and work on learning your co-founder’s communication style so that issues can be handled quickly. Do they have a temper, do they think before they speak, are the respect of your views, can you agree to disagree, are you both willing to hear each other out?

  1. Don’t take things personally

When you disagree on something, know that it is just each other’s opinion you are disagreeing on and it’s not personal. If there is something you take personally, let the other person know what’s bothering you and take actionable solutions.

  1. Importance of constant communication

Make it a point to touch base regularly to keep each other informed where you are with respect to your daily or weekly goals. Make sure communication is open and regular and the environment feels open.

It is always better to have good founder relationships as they bring varies skills to the table. In order to grow an effective and efficient co founder relationship, work on your communication and goals. Be serious about nurturing the relationship and also your patience. And also have a sense of humor.

Read More

14 Jan 10 Tips on How to Get Hired at a Startup

 It is a good idea to work at a startup before you begin founding one of your own. Although not necessary to work for one, working at a startup will give you a deep insightful view on what it takes to build and scale a startup at various stages. It will also give you sense of whether you are cut out for the startup life or not. Here are some ways on how you can get hired at a startup:

  1. Be flexible

No matter what your supposed job title is at a startup, as the company grows, or as demands change, your role will shift. You have to show that you’re flexible enough to adapt to the fast changing startup environment.

  1. Build your network

A lot of startups hire by recommendations and referrals, so it is important to build your network as soon as you can. Meet-ups, networking events, hackathons, conferences etc. are great ways to meet people. Do be shy to reach out to people you know who have worked at a startup or the ones who have these connections that you could get introduced to.

  1. Stay informed

Stay up to date on what is happening in the startup world. This will help you come across as a knowledgeable person who has a keen interest in the industry. You can stay informed by reading all the startup news you can, you can do this by following the many media sources available on the web.

  1. Show that you are open to challenges

Optimism and energy are very pleasing personality traits. They also show that you are open to tackling new challenges.

  1. Tweak your resume accordingly

Usually startups look for what you can offer beyond your resume; what your passionate about and what kind of achievements you have made in the past. Generally, traits such as a hands-on approach, driven mentality, creative mind or great work ethic should be evident in your resume. Also, it helps a lot if you have some previous startup experience.

  1. Research the startup and the industry thoroughly

Show that you are interested and aware about the current environment. Be up to date with the startups current scenario, products, services and funding news. When you have done your homework you will know how you can provide value to the startup

  1. Answer interview questions confidently

Think about examples in the past where you have successfully handed crises, and how you have demonstrated leadership skills, or working under pressure.

  1. Try the product or service

If you can, try the product or service of the startup. You will know how you perceive it and whether you would want to work for the company that builds a product you/service you love. Also, in an interview you need to show that you really understand what the company does.

  1. Follow funding.

If you are keeping track of startup news, you will know which startups have raised funding. If a startup has raised funding, chances are, they will be hiring. Apply to those startups.

  1. Constantly keep updating your skills

Spend some time enhancing your skills. The more you can bring to the table the better. Whether, it is improving your communication or writing skills or learning a whole new skill like coding, it will always be beneficial both for your personal and professional growth.

The last and most important this to know is if there is a startup you are interested in, apply irrespective of whether they are hiring or not. At the very least, ask for an informational interview. Find out what they look for in candidates. If you are skilled enough and can show that you will add value to the startup, chances are they will be willing to create a position for you.

Read More

14 Jan WHEN IS IT TIME TO PIVOT?

9 out of every 10 startups fail. One of the biggest reasons for startup failure is failure to change and adapt quickly. These startups hit obstacles in attaining the right product-market fit, scaling, funding, or monetizing, there is always an option to alter their business strategy or pivot to stay afloat.

Deciding when to pivot is tough decision for a business. Consider these questions:

  1. Have we given the product enough time?
  2. Does the current business model not work or it is an optimization problem?
  3. Are there enough funds?

Understand customers, not just statistics

Know that customers actually have to convert. Just impressions are not enough. There is more to this than just understanding statistics, data, and click-through rates. You need to know them well enough to understand what’s important to them, what they care about, and how your product fits into their world. When you know your customers so well enough that you can visualize them using your product, you’ll have an intuitive sense for when it’s time to pivot.

Fail faster, and more often

Failing early and fast is one lesson all startups can take from Silicon Valley successes. The point is to fail as fast and cheap as possible. Getting feedback from your customers before you go to market is cheap and will not cost you a launch. Getting customers to use a prototype ad see how they use it is valuable feedback. An early pivot is exponentially cheaper than a late one.

Here are a few signs that it’s time to PIVOT

  1. There is more business opportunity when you pivot

If you can identify a significantly bigger opportunity than the one you are currently working on, then you must pivot quickly to capitalize on it. You will still be able to keep the core your product, but also will be able to develop something potentially bigger.

  1. Customers are willing to pay for other things

If you are unable to engage users enough or feel the market is too small, it’s crucial that you explore all other possibilities in the market place that you can monetize.

  1. A byproduct or an internal tool has more of a use-case that the current product.

A brilliant example of this is Slack. The company was building a multiplayer game, when they chanced upon one of their photo sharing features, which turned out to be the hugely successful Flickr. The game however did not take off. The second time they decided to build the game, another one of their features caught on with users. This was their internal chat tool. Slack is now one of the most successful companies in the world and is growing at a tremendous pace. If you build some tool or product to enable the core product, and that makes more sense as a product, it is an indication that there is a larger audience if you pivot. Customer feedback at every stage will help you realize there is a bigger market for it than what you are doing currently.

  1. Revenue is going down

The numbers are an excellent indication of whether you should stick with the current product or not. You will also be able to see if the business is viable. Market validation is crucial in this context.

  1. Growth has come to a standstill

Your growth stagnating is a very good sign that it is time to consider a pivot. But also if your current competitors growth is also stagnating, then you should take it as a definite indication that your product needs to be pivoted.

How far should the pivot go?

Sometimes start-ups raise so much money that they can take a the easy approach when it comes to pivoting – the new product is completely different from the older one and the only assets you are building on are your existing team and the money reserves you have.

But most startups don’t have that kind of freedom, so they will have to think about the direction that is more or less in line with what they have ben working on otherwise the time and money involved will be too steep to justify it. While consider the limits to which you can take your pivot, besides your team and remaining cash, is there a way you can provide a product to the market that no one else (or very few others) has done yet? Is your pivot going to result in a much more significantly profitable vertical?

Logical reasoning apart, you also have to consider your gut feeling and instincts as an entrepreneur to decide if you must pivot or not, when especially early on in the business, numbers may be misleading.

Read More

14 Jan The Lean Approach for startups

The lean startup approach from Silicon Valley is a model that works well for early stage investor funded high tech startups. Eric Ries and Steve Blank first created the lean startup model. It discusses the behavior they should adapt to increase the likelihood that they will succeed. While the concept is best suited for technology or Internet startups, it has a wider application for all startups.

The Lean Startup Model has gained traction because many people want to emulate Silicon Valley startups, and think that what works for those new startups should work for them. But the reality is that the Lean Startup Model is about iterating quickly in the early stages of your startup in order to make sure there is a product-market fit, and that it is a great solution to a real problem. Even if you figure out product market fit through iterations, you will still need a budget, a business plan, a projected cash flow, and decide the milestones you need to achieve in order to implement your strategy. The lean startup method is not a shortcut.

What is the lean startup approach?

According to co-creator Steve Blank, “a startup is essentially an organization formed to search for a repeatable and scalable business model.” Eric Ries who describes how a startup has to focus on discovering a viable business model while operating in a climate of ‘extreme uncertainty’. Building a startup in this way helps shift the focus to a more scientific approach where activities undertaken are viewed as tests that quickly help you validate assumptions (or otherwise).

Is the lean startup a viable business model for you?

When you are searching for the right business model for your startup, it is crucial that you understand that there can be simple processes to ensure an efficient and scalable business model. It is necessary to understand that here time and money is very crucial and is the first basis for making decisions to build what will be called your minimum viable product (MVP). This MVP is the early version of the product or service that can be sent to some customers (early adopters) who will give you feedback, which will help you iterate.

Eric Ries accurately explains this concept in his book:

Rather than building the service and trying it out on customers, create a sign-up page that merely promises to deliver this groundbreaking capability. Then present it to some prospective clients. Compare their enrollment rate with that of a control group shown the usual sign-up page. The results will give the team the confidence either to proceed or toss the idea into the circular file. No one would actually get the new feature yet, of course, because it hasn’t been built.

Understanding a Lean Startup

Here are some key concepts of the lean startup model:

  1. Test Frequently and Learn Quickly

Use your MVP for testing; don’t build an elaborate product before you have tested the products several times.

  1. Observe and Measure Real Customer Behavior

Don’t use focus groups. Watch how real customers behave. Get your MVP to customers and early adopters and learn quickly what iterations need to be made.

  1. Focus on Real Metrics

Metrics that don’t convert are no use. For example, what good is 1 million page impressions if none of them  convert? Instead entrepreneurs need to focus on real metrics, which can help you make informed decisions.

  1. Be ready to pivot

If your original plan is not working, and your research and feedback suggests that changing course is more likely to be successful.

  1. Stay Lean

The word ‘lean’ refers to speed and agility and not ‘cost savings’. Ries recommends that startups take advantage of the research phase and the MVP feedback phase to quickly learn what is not working so they can make changes immediately.

 

Read More

14 Jan Are you ready to scale-up your startup?

Once your startup is showing signs of success, scalability is the next thing that you should be looking at to grow your business. A scalable business is one that can take on a larger amount of business without compromising on performance or losing revenue. However, not all startups are prepared to scale up.

In simple terms, being ready to scale means that your business has the potential to multiply revenue with minimal incremental cost. Your startup is “ready to scale” is when you have a proven product and a proven business model, and are about to expand to new geographies and markets. In this article, we will look at a checklist to help you to prepare for scaling up your startup.

business_1

  1. Vision

You should have a clear vision for the near future of your startup. Consider how your product or service will be relevant over the next five years and have it mapped down in a concrete plan with achievable targets. Without this vision, your startup will not be able to adapt to current trends.

  1. Keep a hawk’s eye view on metrics

Use SMART goals to measure your startup’s growth. Measure your growth regularly to keep track of your progress. Measuring your growth will help you understand whether your metrics align with your vision or not. SMART is an acronym for:

  • Specific – target a specific area for improvement
  • Measurable – quantify or suggest an indicator of progress
  • Attainable – assuring that an end can be achieved
  • Relevant – is the right goal at the right time for you
  • Time-related – specify when the results can be achieved
  1. Focus on the fundamentals

Often startups fail because of premature scaling. Make sure you have attained product market fit. You can make gradual improvements through product iterations based on customer feedback. Know who your core users are and the biggest marketing channels.

  1. Use a minimum viable product (MVP) to validate the model.

No startup, even with a large (potential) opportunity, is ready to scale until you can show it working, with multiple customers willing to pay and paying the full price to validate the business model. Go through multiple iterations with real customers, and use their feedback, before you ask for investor money to scale

  1. Solid business plan

Make sure the reason for your startup failure is not due to poor planning. You need to develop a solid business plan that demonstrates your goals. Read our guide to drafting a business plan. It is important to develop a business plan that will attract future investors. Read our guide to what investors look for before investing. Have the metrics place for how you plan to use the funding. Make sure you have the resources to scale. See if you need to seek an additional round of funding. Running out of money while scaling will be very detrimental to your startup.

  1. Automate

A startup that is labor intensive and staff intensive is usually not scalable. Start looking right away at the early stage at production automation, proven process technologies, and minimum staff approaches, before you begin scaling.

  1. Outsource non-essential work & hire only if necessary

A big corporation can afford to have in house designers, lawyers, growth hackers etc. As a startup, you might not have that luxury. Hence it is important to outsource all non-essential roles. It is crucial that you focus on your core competencies to take the lean approach to scale up. Hire only if necessary and only hire the right people. At this point, you should be working “on” your business and not “in” your business. A business‘s scalability to a certain extent also depends on your team. Hire only the people who are necessary to the operations. Rest all can be outsourced.

  1. Continually work on improving your business

Even though there are a lot of factors out of your control, like the economy, if you and your startup are not flexible enough to respond to new trends and market demands, you will not be able to scale. Be willing to redesign or pivot. Innovation is usually how quickly you can redesign or pivot in order to be able to scale up. Create a strategy that focuses on continuous innovation and makes an effort to plan ahead for the future. This will help you continuously improve as a business.

With the above tips, you will be able to maintain scalability and be prepared for the challenges that your startup will face while scaling. Scalability is as much your determination as the founder, as much as it is about having the right systems, processes, people, and business plans.

Read More

13 Jan BOOTSTRAPPING YOUR STARTUP

As a startup founder, you know that not all startups are able to get investors when they start off. Sometimes you have to fund your startup from your own savings or bootstrap. Often, founders don’t understand that may not even need the funding. First-time entrepreneurs often have trouble getting funding without first showing some traction and a plan for potential success. When bootstrapping, you have to understand that bootstrapping your startup may not lead to VC funding. Funding is not the end goal of bootstrapping. Here’s a list of ways to help you with bootstrapping:

boot strap startup

Pick your founding team wisely

The initial team that you hire while building your startup will be the core individuals whose contribution will be critical to the future of your business. When you bootstrap, all the work will be done in house, so it is good to have people on board who are skilled in various things and complement each other’s skill set. It is crucial that your founding team understand and mirrors that passion that you have for your startup.

Monitor cash & be smart about money

Create a separate bank account for business, for tracking what brings in cash and what are expenses from the business. You don’t need to have a fancy office space. There are a lot of free tools you can use. Design your own business cards. Spend on things that are functional and core to building your business, for instance, technology.

Don’t outsource

Hiring people or outsourcing for jobs that you can learn and do yourself is an expense that can be avoided. Don’t learn this the hard way.

Work on doing one impossible thing

Work on doing one thing that no one else out there is doing. It could be a non tech co-founder learning how to code or pulling off a difficult and seemingly impossible growth hack. These will set you apart from your competition. Coding, sales, marketing are all core to the building of your startup. Learn how to do these yourself. Almost all successful startups that are bootstrapped worked on both the technology and the getting the initial customer base. Examples are: Quickheal, Just Unfollow, Directi, Zoho, etc.

Work on building personal relations

When you’re a very small startup, not many people might want to work for you. It takes working on personal connections to get a yes. Network to build connections with people that will help you in the long run.

Bootstrapping your startup is difficult, but not always impossible. Your passion for your business, an excellent team and dedicated hours of hard work, you just might be able to successfully bootstrap your business.

Read More

13 Jan 7 ALTERNATIVE SOURCES OF FUNDING BESIDES VENTURE CAPITAL

 Many early stage entrepreneurs are often faced with the question “When should we seek venture capital funding?” It’s an important question because growing business need funding, and need to raise them from specific sources. The most common way of raising funds is through venture capitalists, but you should take the time to find the right type of capital to match the specific needs of your startup. Not all businesses are suited for VC funding. In this article, we discuss a few alternative sources to Venture Capital funding.

17621-NR7PZ4

1. Bootstrapping

Sometimes, the best option to is to fund your business out of your own savings. Bootstrapping involves cutting a lot of unnecessary costs while starting up. You will have founder’s equity. There will be no dilution to the founders if there is no outside funding. If your bootstrapped startup is getting some traction, and if you need it, you can then go raise a round of funding from venture capitalists.

2. Debt

Depending on the stage of the business, debt may be a viable option for the company. Debt is cheaper than equity although it might not be apparent at first.

3. Angel investors

Friends, family, high net worth individuals, professional angels, and people from the industry may all be viable sources of capital when VC money is not an option.

4. Private equity

Many smaller market private equity funds can work a slower growth, yet profitable business. Certain investors prefer these types of investments as it fits into their portfolio and risk profile.

5. Cash flow from operations

You can invest your profits in areas that will create high returns on investment. First you will need to figure out how you can maximize cash flow, and then use that cash flow to fund high value investments. Use the profits, not the revenue for growth. Relying on up-front payments as a financing mechanism will drastically reduce your need for seeking outside capital.

6. Bank loans and lines of credit

Bank loans typically must be backed by inventory or accounts receivable, and often require a personal guarantee.

7. Government And Private Grants

Government grants are a great source of funding for your business, as grants don’t dilute equity. It is especially prudent to seek this type of funding if your business is in the educational or social areas. Grant money is a great fit for R&D of technology.

Understanding that there are various sources of funding besides venture capital is very important, as all businesses might not be the right fit for and also might not even need VC funding. Choose the right type of funding that will be strategically advantageous to your business.

Read More