Wednesday 25 November 2009

Silicon Valley came to Cambridge - what were the ah ha moments for me?!

There was a busy programme of events, masterclasses, workshops, networking, dinners and banter over the two and a half days of the visit by a dozen or so entrepreneurs from Silicon Valley. I attended a number of the formal sessions and the dinner at the Masters Lodge at Trinity College. Apart from the energy and buzz which is so typical of events that gather together entrepreneurs - especially those with credibility what else did I get?

A conference with entrepreneurs is soooo much more fun, educational, exciting, stimulating for opportunities and positive thinking - no one even mentioned the recession/credit crunch/difficulties or any such negative challenges. Was this because we mixed Silicon Valley with Silicon Fen? Maybe.

There were specifics - such as - where and when can you succeed as a small company innovating against a giant - "when you keep out of the spotlight of the big company". I like the use of such language rather than the dry business speak of professionals.

To partner with large companies as an entrepreneurial firm - find yourself an internal champion, get past the gatekeeper to the decision makers (never overestimate the clout of your contact)because decisions in large firms requires the buy-in of many stakeholders.

Before you think that partnering is key to your business strategy ask yourself - why can't you just Go For It?

To build internet businesses - some key tips:

Ensure that you build a fabulous user experience - just think of the simplicity of the google front page.

Ask is it scalable and try and establish that fact early in the business cycle.

Set yourself tight milestones and make sure you hit them.


There were two great sound bites that I took away

SMEs die of indigestion rather than starvation
Never become half pregnant

There was a lot to learn from the two days of oxygen filled events - so a big thank you to everyone that took part in all their different roles. There are an increasing number of pictures, videos, blogs, news items all over the internet. If you are hungry enough - please follow via svc2c.com


Pictures on http://www.flickr.com/search/?q=svc2c

Monday 23 November 2009

Should entrepreneurs be cross with banks or bankers for the mess we have now?

Should entrepreneurs be cross with banks or bankers for the mess we have now?
At a debate last week at the Cambridge Union – part of the Silicon Valley Comes to Cambridge event- a few simple facts became obvious – well once we dealt with the noise in the information.
We need a banking system that works – full stop. We need it for making transactions happen. We need it for enabling the circular flow of money; enabling the provision of mortgages and lending for short and medium term.
The challenge of the Western capitalistic system seems to be that in order to provide these services – governments have instituted legislation, rules and bodies to regulate, largely it seems to me because the industry attracts people who are mesmerised by the making of money – for its own sake rather than because it is an end point of providing a service or product that adds value to society.
Usury was seen as evil until not so long ago – I wonder why!
So – while a healthy banking system is meant to help a money based economy go round, the way it is administered has lead to all manner of abuse and I do not need to rehearse these arguments here. The summary of the debate included the following issues: That by losing the plot – banks have taken much needed liquidity out of the market place so instead of having access to funds for investments, lending and generally provide for a positive role in the economy we have become distracted instead by issues of abuse and bonus payments. And it seems there is a relentless pressure from the bankers to insist they are worth it!
My only quarrel with the debaters would be that they talked about “Global meltdown” “entire economic systems” and so forth deluding themselves that only London and New York mattered...Well guys just in case you do not know where India and China are (as one of the debaters did not seem to know where Iceland was!!) you can find them on any good search engines.
In those countries entrepreneurs are somewhat relieved that although their banks are strict, cumbersome and lack in flexibility – at least they have banks they can go to. I think entrepreneurs in the present collapsed system have every reason to be cross with their bankers.

Sunday 15 November 2009

One of the fastest internet companies with cash and profits!

Once again the audiences of Enterprise Tuesday at Cambridge were treated to some insights into entrepreneurship by asomeone who is very modest about his achievements. His initial take was that he just bumbled along for about 7 years from 1990 to 1997, living off his wife’s success – a former classmate from the Indian Institute of Management and now a successful top flight executive. He had tried many ideas, projects, consulting assignments and then started to follow a pattern that he saw all around him – that people seemed to open magazines from the back, spent time on the jobs pages before turning to the contents of the magazine.
So he and his nascent team and partner formulated a jobs based website, developed business models that were based on revenues of advertising from prospective employers. All this while bootstrapping the business out of bedrooms and garage spaces in Delhi (note – not in Silicon Valley!).
The company realised the basic proposition had to be that they had content – of jobs. So they took in all the newspaper advertisement – from 29 newspapers and uploaded the jobs onto the website – www.naukri.com
This was an initial big hit – huge numbers of visits and pretty soon it became apparent to employers that they had better use this channel as well. They now get over 200million unique page views per month. The company has become the hub of the Indian talent market and this has enabled the company to develop multiple streams of revenue; advertising being the mainstay.
When they reached $80,000 revenues with 9 staff, they started to receive visits from “smart MBAs” who had joined venture capital and were now riding the wave of hype around the dot com bubble. He was amazed and turned down offers of venture capital, all of which were placing his company at around $9m valuation. Sanjeev argued that had he taken the money and tried to invest it at the time – his balance sheet would have gone negative! He jokes – that they were somewhat paralyzed by the fear of “wasting the investors’ trust and cash”
Eventually – they took in money from ICICI and being cautious – he says with a wry smile – they put the cash into deposit accounts until they could figure out a really strong growth strategy. The injection of capital did give the confidence to go for growth. The initial test of strategy came when the sales director suggested that they grow the sales team as he had seen a direct correlation between increased sales people on the ground and increased sales. So – although they are a web company, they now have over 50 offices in India and neighbouring countries and around 1600 staff, most of who are in sales. They have 200 staff that develop technical solutions to meet the needs of the recruitment market.
This is a rapid growth business by any measure and the founder Sanjeev Bikhchandani is modest to say that the early days were action packed rather than strategic. It is only with the early success that the confidence grew to start to establish a firm strategy for growth, by diversifying the revenue streams, hiring people – based on generous reward structures and eventually by placing memorable advertisements on television to drive traffic to the web http://www.youtube.com/watch?v=f-89JndcGK4

The growth strategy was starting to build on gaining deeper insights into why people moved (at least in India) and one of the key reasons turns out to be disillusionment with the boss! This is what they used in their advertising and the character created became a household term for “nasty boss”!
What has Sanjeev learned from his business and entrepreneurial career?
If a problem has already been solved – don’t do it
Ensure that whatever business idea you come up with scalable – especially if you want to attract investors.
Talk and listen to customers – build deep insights
Focus – do one thing and do it well
Have the courage to take advantage of being a first mover. This can give you market leadership
Improve continuously – and do it quickly and keep it moving (something they call fail fast in silicon valley)
To build teams – be prepared to share your wealth
Retain a frugal mindset at all times – it helps if things get tough
Put yourself into ecosystems where you can get lucky! (Not sure if we should rely on luck for growth – but it sure helps if you get lucky!)
What has been the biggest mistake he has made – hiring for convenience rather than for quality!
Sanjeev runs a blog on http://www.sanjeevbikhchandani.com/
He has also kindly given us his investor presentation
http://www.infoedge.in/pdfs/corporate-presentation-august09.pdf

Once again the audiences of Enterprise Tuesday at Cambridge were treated to some insights into entrepreneurship by asomeone who is very modest about his achievements. His initial take was that he just bumbled along for about 7 years from 1990 to 1997, living off his wife’s success – a former classmate from the Indian Institute of Management and now a successful top flight executive. He had tried many ideas, projects, consulting assignments and then started to follow a pattern that he saw all around him – that people seemed to open magazines from the back, spent time on the jobs pages before turning to the contents of the magazine.
So he and his nascent team and partner formulated a jobs based website, developed business models that were based on revenues of advertising from prospective employers. All this while bootstrapping the business out of bedrooms and garage spaces in Delhi (note – not in Silicon Valley!).
The company realised the basic proposition had to be that they had content – of jobs. So they took in all the newspaper advertisement – from 29 newspapers and uploaded the jobs onto the website – www.naukri.com
This was an initial big hit – huge numbers of visits and pretty soon it became apparent to employers that they had better use this channel as well. They now get over 200million unique page views per month. The company has become the hub of the Indian talent market and this has enabled the company to develop multiple streams of revenue; advertising being the mainstay.
When they reached $80,000 revenues with 9 staff, they started to receive visits from “smart MBAs” who had joined venture capital and were now riding the wave of hype around the dot com bubble. He was amazed and turned down offers of venture capital, all of which were placing his company at around $9m valuation. Sanjeev argued that had he taken the money and tried to invest it at the time – his balance sheet would have gone negative! He jokes – that they were somewhat paralyzed by the fear of “wasting the investors’ trust and cash”
Eventually – they took in money from ICICI and being cautious – he says with a wry smile – they put the cash into deposit accounts until they could figure out a really strong growth strategy. The injection of capital did give the confidence to go for growth. The initial test of strategy came when the sales director suggested that they grow the sales team as he had seen a direct correlation between increased sales people on the ground and increased sales. So – although they are a web company, they now have over 50 offices in India and neighbouring countries and around 1600 staff, most of who are in sales. They have 200 staff that develop technical solutions to meet the needs of the recruitment market.
This is a rapid growth business by any measure and the founder Sanjeev Bikhchandani is modest to say that the early days were action packed rather than strategic. It is only with the early success that the confidence grew to start to establish a firm strategy for growth, by diversifying the revenue streams, hiring people – based on generous reward structures and eventually by placing memorable advertisements on television to drive traffic to the web http://www.youtube.com/watch?v=f-89JndcGK4

The growth strategy was starting to build on gaining deeper insights into why people moved (at least in India) and one of the key reasons turns out to be disillusionment with the boss! This is what they used in their advertising and the character created became a household term for “nasty boss”!
What has Sanjeev learned from his business and entrepreneurial career?
If a problem has already been solved – don’t do it
Ensure that whatever business idea you come up with scalable – especially if you want to attract investors.
Talk and listen to customers – build deep insights
Focus – do one thing and do it well
Have the courage to take advantage of being a first mover. This can give you market leadership
Improve continuously – and do it quickly and keep it moving (something they call fail fast in silicon valley)
To build teams – be prepared to share your wealth
Retain a frugal mindset at all times – it helps if things get tough
Put yourself into ecosystems where you can get lucky! (Not sure if we should rely on luck for growth – but it sure helps if you get lucky!)
What has been the biggest mistake he has made – hiring for convenience rather than for quality!
Sanjeev runs a blog on http://www.sanjeevbikhchandani.com/
He has also kindly given us his investor presentation
http://www.infoedge.in/pdfs/corporate-presentation-august09.pdf

Friday 6 November 2009

Creating opportunities in technology - Experience from two Business Angels on Enterprise Tuesday

Having just spoken with David Cleevely and Andy Richards about their talk(s) on Enterprise Tuesday on the 10th of November 2009, - they see about 2 - 3 ideas per week and have to try and filter out those that excite them enough to invest in. What are the criteria by which they do this and how can we learn to use their insights and knowledge to create, sort, filter and hopefully make winning decisions on?

They will use examples from their portfolio of experiences - which include huge successes, middling companies and the odd failed business to run thorugh a general framework we can use.

Here are some headlines:

o ideas are cheap (need to be great not just good)
o timing is crucial (things are in the air; by the time you have recognised them it may be too late; on the other hand those deep in the know may be too early)
o fashions hold more sway than they should (eg Web 2.0) - so watch for the Gartner hype cycles
o you need to stress test things by talking them through (preferably with lots of people). Would be entrepreneurs who hold cards close to their chest are to be suspected. (those who have done it a few times can be given more leeway)
o the proposal should break the established dogma
o there’s a trigger point (which if missed means no funding).


David and Andy are highly entertaining and animated presenters, they are on national and international platforms when it comes to their contributions to policy, entrepreneurship and corporate lives.

I can't wait to hear them and look forward to chairing the time keeping as I am sure the Q+A session will run and run!

Sunday 1 November 2009

Meeting customer needs – Learning from Kell Ryan

The story behind the huge success of Ryanair – which has grown from a small Irish airline with 5000 passengers to an international carrier with 200+ planes, 900 routes, profits and with 58m+ passengers is a lesson to us all.
How have they done this?
A clear vision that is easy to articulate seems to be the starting point – A low cost airline! This vision is then applied with a mix of innovation and inventiveness on one side a hardnosed approach to cost control on the other. The benefit of this simplicity is that customers understand the offer very clearly.
The next point is to hire talented staff and get their buy-in with shared rewards (options schemes) and to train them into the way that the airline wants to run. The staff is mainly young – in their late 20s and they bring with them their energy. They are located in some 30 centres across Europe, so they incur no hotel costs, all returning home every night.
With this mix of vision and operational simplicity, the airline has met two of the most important needs of the customer – anon time airline that provides the lowest fares. There are no frills and everything beyond the basic service of a “bus with wings” is charged extra. This results in some 20% of the revenue coming from ancillary charges.
What else does the airline do to meet the needs of customers? Actually the focus is very clear – it is to bring down the cost of international travel – that is it. The response to any further questions on this matter are simply to see that most other airlines that try and provide full service offers do not make money and that the number of airlines that lose money is high. Ryanair is one of the few airlines in the world that makes money.
In addition to ensuring staff retention strategies, the airline has also taken steps to retain common sense and kept a continuous watch on costs. So staff helps to clean the aircraft, load the passengers and run the cabin services. Seats are locked in place to reduce maintenance charges. There are no sacred cows – so if something needs to be reduced, charged for or changed the airline will do it.
For example – they got rid of lemons from gin and tonic. This saved on time and cost and the passengers did not miss it. They have introduced on-line boarding now – so that takes away queues from airports and reduces costs further. The charge for luggage is now being copied by other airlines.
The management and the teams stay focused on costs and ensuring they do everything they can to be the lowest cost airline. But having said that – their staff are not badly paid – so it is not in this where they make savings – recognising that cabin staff do need to be rewarded and to find the right quality of pilots also takes money.

One of the breakthroughs for the airline was the rapid growth of the internet. This has enabled the airline to innovate in all manner of ways from on-line sales, ancillary bookings of car hire, hotels etc., through to now online check-in. The senior team were creative in the way they arranged to buy the website developers. They had had two professional quotations, one from a Dublin firm and another from a London firm. Both were thought to be too expensive. So they turned to a group of 4 high school students (doing their A levels) and paid them in free tickets, some cash and subsequently for two of them - jobs in the company!
In summary – the business is run on a “keep it simple and straightforward” basis – where all the staff and the passengers know that the basic offer is to fly from point to point at the lowest cost. This simplicity has turned Europe into a single continent, connecting 500m+ people at affordable prices. Through this, people are taking weekend holidays, jobs and buying second homes.
Throughout the growth of the airline - one of the other qualities they have shown is the courage of their conviction. Without hesitation they absorbed the Southwestern airline model, pushed for second tier airports as way of cutting down on airport costs and ensuring better time keeping (keeping away from busy airports, went for 100% web based transactions, charged for luggage, have now gone for 100% web based check-in and so forth. They were bold to go with A level students to develop such an important part of their business.

In meeting the core need of their customers they have shown the focus on staff retention, inventiveness in reducing costs, focus on the core offer has kept them from being complacent and are important lessons for how one delivers strong marketing programmes.
This message of simplicity and boldness is a very powerful one in entrepreneurship and management and therefore I will keep away from the frequent times in which the airline courts controversy.