Chairman’s message

The Society for Innovation and Entrepreneurship, SINE, has turned 9 this year. SINE was evolvedfrom the pilot IT incubator started in early 2000. It has been helping faculty, students and alumnito convert their ideas into entrepreneurial ventures.

Over a period of time, SINE has helped in creating an entrepreneurial environment at IIT Bombay.SINE actively engages with faculty and students of the institute to support new entrepreneurs.ithas built strong links with professionals and venture capitalists to provide support for the incubatedcompanies.

Since its inception, SINE has incubated a total of 46 companies. Over half of the companies havebeen set up based on technologies developed at IIT Bombay, and 25 ventures have receivedequity and debt capital from investors. These companies have generated jobs for about 1000people and 250 internships for IITB students.

SINE plans to enhance its incubation activities by way of virtual incubation of companies in othercities, The first such initiative will begin in the city of Pune. Plans are underway for a new building,which will increase the capacity of SINE from the current 17 to 50 incubatee companies.

SINE aims to provide support to a greater number of entrepreneurs who leverage technologyexpertise at IIT Bombay to create innovative new companies, which will drive the growth of theeconomy.

This is the first release of SIgNEture, a new quarterly newsletter from SINE. SIgNEture will act ascommunication channel between various stakeholders to strengthen the entrepreneurialecosystem.

I wish SINE all success as it embarks on this new endeavour!

IIT BombayJune 7, 2013

(Devang Khakhar)

Editor’s Note

Very often, one finds that while an important facility is available to a community, the community itself is not very aware of its being there and the enormous scope it offers. This is so true about SINE, the Society for Innovation and Entrepreneurship. I had spent about 7 years in IIT Bombay as a faculty, before I became the Professor-In-Charge of SINE. My knowledge about SINE was restricted to a vague understanding that it provides support to those of the entrepreneurial bent in the IIT Community. Beyond that, unless one went to SINE, and spoke to Poyni Bhatt or the erstwhile CEO, Sushanto Mitra, there was not much information available.

So how does one go about getting information on different activities related to entrepreneurship on the IIT campus, funding prospects, innovations, business leaders etc.? When it comes to finding out what is happening around entrepreneurship and innovation, we need to have initiatives to document the processes and disseminate the documentation. There should be enough channels of communication to disseminate the latest news around entrepreneurship and innovation. Many of us have grown up during a time when news was more of a monologue. Now, thanks to the evolving interactive communication made available, there has been a shift towards real dialogue. Internet and technology have enhanced the ability to create channels. However, in spite of technological advancement, I always see a gap between documenting the entrepreneurial initiatives of today, and the dissemination of that information. SINE's SIgNEture is an initiative to bridge this gap.

SINE has given an opportunity to the entrepreneurs of the IIT Bombay community to express their innovations and ideas in the form of startup companies. They, in turn, have brought in finance and business acumen in an effort to transform innovations into economic goods.

Reaching Out ....

As a result, the entrepreneurial culture in campus has become dynamic, enabling and continuous.

SIgNEture will document the entrepreneurial efforts and start up ecosystem continuously, and disseminate the information regularly. SINE was started as a formal body in 2004. Since then, the endeavor has been to build an active entrepreneurial culture in IIT Bombay. The inaugural edition details the passionate contribution of the community to bring it to the current shape. In addition, it carries inspiring articles from our alumni, faculty members and entrepreneurs. SIgNEture has both, a print and, an online edition. The newsletter is there not only for the interested to read, but also to involve the relevant community with us. We hope that it will act as a catalyst and a source of inspiration for budding entrepreneurs.

Hope you enjoy reading this edition of SIgNEture.

Prof Milind Atrey EDITOR

July 2013 I I 02

I have studied Mechanical Engineering from IITBombay. I graduated in 2004. After that, I worked for 2 years in Hindustan Petroleum and then started my company ThinkLABS.

We came to SINE in 2006. Then , SINE was just 2 years old. The whole idea was to promote entrepreneurship. SINE also grew in various forms in its initial phase. Prof. Amarnath was In-charge of SINE. Prof R K Lagu was in the beginning when policies were formed. We got the chance to interact with Prof. Lagu also.

Prof. Amarnath had worked with all technology people . He had keen interest in technology. He was the Head of Robotics Department and also Dean of Academic affairs in IITBombay. As Dean ( Academic Affairs) he was involved with student relationship and student related activities like TechFest, Mood Indigo etc.. which happens in IITBombay. I think Prof. Amarnath could see how values could be created by student and in a much more organised manner. He was working towards it

We have seen how SINE has evolved . Initially when we came here, there was hardly any VCs. Now most of the SINE companies have VC funding.

When we were students in IIT, we were not knowing about venture or entrepreneurship. But what we were knowing was about some subjects like mechanical engineering, robotics etc.. I knew that it can be commercialised. We can make money out of it. But how we can make money we didn’t knew then. SINE gave the platform to get the courage to take to a step further.

When I was student in IITBombay, I took part in Techfest . I was also the Manager of Techfest. We could co-relate with Prof Amarnath . He helped us a lot in taking initiatives at student level.

In IIT , people including Prof Amarnath helped us to start venture on our own. That is the first thing that IIT did. Second one, when we came to SINE, we were immature and inexperienced. We had just idea about that something was working. We were able to sell something in the market and people were ready to pay money for it. But there was no structured plan around it.

Incubation Experience

SINE including Prof Amarnath and Poyni Bhatt helped us in creating a Business plan. They helped us in getting clarity in the company i.e what all should we do and what all we shouldn't do, prioritising things, creating culture in the company, creating processes like HR process, finance process etc. And also, in the whole process, they helped us in meeting external people like venture capitalists. We got our first early stage investor through SINE only.

We have reached a certain level where SINE has played a crucial role. They were the first one as a professional body to sustain us. They came first, in a way they accepted our idea, they believed in our idea, they worked with us together for two and half year initially. Together means they used to interact with us on a daily basis, creating our HR policy, creating our finance model etc.

They helped us a lot in hiring process, whom to hire and whom to not, what salary to give ? They were like my extended founding team members. You can go to SINE anytime and ask for any help. Today apart from my team who comes to my mind is SINE and second is our industry.

We are a company that was started before we came to SINE. We were nine months in operation. We had revenue. We were a running company. We had not come to SINE for office space. We had our office in Hiranandani. We wanted mentorship for which we went to SINE which we feel is very important. We wanted that ecosystem.

After coming there, we realised that whatever we were looking for there are things beyond that. You have 10 companies next door to you. They can give input to you. One will find the existence of entire ecosystem of entrepreneurship in SINE.

“We went to SINE for mentorship.”

(As told to SIgNEture Team)

Gagan Goyal, Founder, ThinkLABST hinkLABS is one of the successful ventures among

SINE incubated companies. This company works inthe field of robotics. With over 100 employees, the company has been dealing with both local and global clients and associates.

It’s founder, Gagan Goyal has narrated his incubationexperience.

July 2013 I I 04

The Entrepreneurial Landscape in IndiaBy Aditya Mishra

The Indian entrepreneurial ecosystem is evolving fast as the country is offering enormous opportunities.

Entrepreneurship

f one looks at the Indian entrepreneurial ecosystem Ifor over 10 years, the landscape can be described into some main constituents. It can be categorised broadly as Opportunity, Investors, Mentoring, Customers and Entrepreneurs.

Opportunity

India is in a phase of massive change – has been for the last 2 decades and will be for next several decades. The main drivers of this change are the millions of people that are entering their youth. These people are exposed to the wealth and lifestyles of others who are better off through mass media and Internet. Such exposure makes them strive for a better future for themselves. The sheer strength of this strong desire coupled with the huge numbers ensures that India would grow one way or the other. Thus, take any person between 20 and 40 and you would find them working hard to better their future and adding to their consumption basket. The rural poor are migrating to urban centers and are entry level consumers for Communication, Education, Healthcare and Entertainment. The middle class is consuming more of white goods, cars, vacation, eating out, fashion etc. This growth has several implications:

1 . Several markets are big and becoming huge: There are several traditional markets which have always been big and now they are becoming huge. These markets cut across several consumer segments and are in universal demand. Education and

Visit a backward state like Bihar and these two businesses are the only large visible businesses there . People see education as a key to unlock a better future for their children. They also need health care given the unhealthy and stressful lifestyle. If you visit an urban center like Bengaluru, you will see huge health care centers modeled after the ones in US and international schools. The richer people want the best in the world in India. Both ends of the spectrum – “basic needs” vs “best in the world” are growing and many times it exists side by side in urban centers. This means that a number of new businesses can start even in established markets if they have good capitalization and differentiated offerings. A great case study is Yes Bank which started in 2004 and reached Rs 1,000 Cr profits within 8 years of starting up.

2. New markets are emerging: Several markets that did not exist earlier are now well established in India – Security services, Cab services, Amusement parks, Fast food chains etc. There are several examples of entrepreneurial successes in these areas – Topsgrup, Meru Cabs, Essel, Jumbo Vadapav, Fasoos, Mast Kalandar etc. Many of these markets are easy to see as India’s trajectory in its growth mirrors that of US and China.

3. India requires different business models: India has unique needs and this means the offerings and business models need to be different. Again, there are many case studies – JustDial, Ola Cabs, Akosha, etc. JustDial just completed its Initial Public Offer (IPO) and is an

interesting case study. Today, an Indian consumer prefers to call up JustDial rather than look up something online as in US and Europe.

4. Technology driven dominated markets are smaller: Internet is still not very big in India and therefore, consumer businesses using Internet are nowhere as big as their offline counterparts. Enterprise technology businesses also struggle in India as the first problem for businesses in India is to quickly add as many customers as possible rather than use technology as a differentiator or for efficiency.

Enterprenuers are in a meetingJuly 2013 I I 05

form uniquely Indian value propositions.

Investor The Indian investor ecosystem has modeled itself after the US model. The players are similar – VCs, Angels and accelerators but the playbooks are different.

M ost of Indian VCs have raised money from overseas investors and have a fund reward structure similar to US funds. This severely limits the smallest size of investment they can make. On the other hand, technology businesses, that can be scaled up, fast need far lesser capital in India than in US. Thus, VCs in India tend to invest in a business in a far later stage when compared to US. This is now changing in two aspects. First, there are smaller VCs like Kae, Blume and India Quotient which make smaller investments. But in many of the investments, these funds tend to follow another investor – typically an angel. Second, a number of VCs are making stealth investments of smaller size ($ 0.5 Million) to develop exclusive deal flow.

Indian angels fall in two categories:

a) Organised The organized angels are in groups like Mumbai Angels and Indian Angel Network and their number can be close to 300. However, most of them are inactive. The primary reason for such inaction is that angel investing is new for most of the investors. They look at the more experienced investors to lead. Thus, the effective size of such groups comes down a lot.

In all, only 25 – 30 deals get inked in a year with average size hovering around $ 0.5 Million. Almost all of these deals have significant revenue traction.

b) Unorganised.

The unorganized angels are either friends and family or rich individuals looking to make money in fads such as eCommerce. They are usually not as sophisticated as the organized investors. They are not even clear on how to make an exit, term sheets etc. It is difficult to estimate the no of deals in this segment, but, it’s easily in the 75 – 100 deals a year range.

Accelerator is an interesting segment in India. The accelerator model combines investment with mentoring and banks on the rapid learning in the early phase of a start up. Given the low amount of investment, a number of accelerators have come up and are coming up. The experience so far is mixed. First, most accelerators are still learning the ropes and are struggling at it. Second, older accelerators have found that the pace at which startup can discover the market and build for it is far slower in India. This means that funding at incubator stage is not enough to get the startup to the angel round.From an entrepreneur’s perspective, there are several problems with the Indian investor ecosystem:

1. Large gap between accelerator funding and Angel funding:

Accelerator funding makes it easy for many entrepreneurs to start. But unless they hit revenue stage and show promise of a $100 Million revenue, angel funding is difficult to find. Thus, there is a yawning gap between accelerator funding (Rs 10 lacs average) and Angel funding (Rs 2.5 – 3.0 Cr average).

2. Lack of funding for businesses with long build cycle:

A lot of two sided business that take a long time to build, find it difficult to get funded in India as Indian investors want revenue quickly.

But this is quickly changing at least in consumer markets where e-commerce and airline/bus ticketing are now big businesses. Observers are expecting that a number of new businesses will come up in India in the next decade. A number of these would be driven by changing consumer needs and demographics rather than changing technologies. Most of them would use technology aggressively as well, but, technology would not be a key driver. Many technology businesses would also start, but, it would take more time before theydominate value creation by startups. They would also need to find global markets markets or

Entrepreneurship

A mentoring session

July 2013 I I 06

to build, find it difficult to get funded in India as Indian investors want revenue quickly. Such businesses currently rely on overseas investors, friends and family.

3. Lack of funding for medium sized businesses: All investors want businesses that would scale to $ 100 million in a relatively short time. This is how a VC’s business model works. This in turn drives the motivation for Angels and Accelerators who have built their model on the assumption of exit to VCs. The problem is that there are hardly any investors for businesses that could be a $ 50 million and very profitable. Several more accelerators and a few more funds are expected to come soon. It remains to be seen if any of them look to solve these problems.

Mentoring Mentoring is a very important part of any entrepreneurial ecosystem. It is the invisible knowledge transfer that dictates how fast an ecosystem grows up. Mentoring can be of two kinds. The first kind consists of advice based on personal experience. Such advice helps an entrepreneur learn from the methods, successes and mistakes of the others. It can be on a variety of topics –from how to hire to how to sell. It varies from methods (how to hire, how to sell etc.) Such advice helps an entrepreneur learn from the methods, successes and mistakes of the others. It can be on a variety of topics –from how to hire to how to sell. It varies from methods (how to hire, how to sell etc.) which are easily replicated to lessons that are unique (when is a product ready, reputation of people etc.). The second kind of mentoring is more akin to coaching. A mentor of this mould asks questions that the entrepreneur should look at rather than giving advice.

There is a large demand for mentoring in India. Perhaps it is ingrained in our culture that we need a teacher or a role model for everything we do. Most of the times, this quickly comes down to “gyan” workshops where entrepreneurs dole out maxims. Many other times, these are in form of mentoring clinics or camps, where entrepreneurs starting out get half an hour with “mentors” who advise on aspects such as business models. The biggest issue is that most successful entrepreneurs are busy and do not participate. People who do participate are either past entrepreneurs with moderate success and a lot of hype or even worse – employees of a VC/accelerator who regurgitate what they read on blogs in absence of operating experience. It goes without saying that the advice in such cases is highly suspect or way outside any true expertise. This is not to say that all so called mentors are bad. There are several good ones. They usually are VCs or angels who advise as a way to engage entrepreneurs and develop deal flow. Some of them may be retired entrepreneurs too. This category is also able to act like a coach and does that many a times. But such people are very few. Also, they haven’t taken to blogging the way some of their US counterparts have done. There are many potential mentors outside of the formal ecosystem. These are people very busy with running successful businesses either as owners or as senior managers. They need to be sought out the old fashioned way. Many of these have very limited online presence; perhaps limited to LinkedIn. Thus, an entrepreneur needs to work hard to seek good mentors. On the whole, the mentoring aspect of Indian entrepreneurial ecosystem is very limited. More real mentors are needed. Structured mentoring programs would also help a lot.

Also, there needs to be pay-offs to mentors besides deal flow because many good ones are not investors.

Customer

The Indian customer is very unique. Many books can be written and have been written on this. This has deep impact on the way businesses need to be built up.

Some examples on the enterprise software side:

1. Customer wants a product and then wants it customized to such small details that the distinction between product and custom built software gets blurred.

Entrepreneurship

A start‐up exhibition

July 2013 I I 07

themselves were “techie” before they moved on to “better” things. Similarly, for a lot of technology focused entrepreneurs, business people are shallow people who can only talk and not do. Needless to say, this stereotyping leads to a lot of friction and failures. What is missing is a bunch of thought leaders who talk about their experiences of building businesses in India. Their experiences are indeed very different from entrepreneurs elsewhere – how to deal with govt. paperwork, how to hire when everyone wants a safe job, how to deal with corruption, how to get adoption, how to build brands etc. These also need to be people who put across models like customer development that can be replicated by others.

Conclusion

The hallmark of an ecosystem is how fast it evolves and adapts. The Indian one is indeed evolving fast given the high growth in opportunity. The fodder to this engine – entrepreneurs, investors, mentors etc. – all of them are far from perfect. So some of them would go extinct and some others would adapt. The question is which one would adapt and succeed and therein lies a conversation.

2. CIO rarely has any decision making authority in most Indian companies. At best, they make recommendations to CEO. However, MNCs in India and Indian MNCs work differently.

3. Relationships count for a lot more than product and price. Customers want personal commitment so that if something goes wrong, you would take personal responsibility to set it right.

4. A lot of business is still in public sector. But selling to PSUs requires deep past experience as they seldom take chance with anything new. This requires selling to private sector first. Don’t be surprised if the marquee private sector name that you are chasing to be yourfirst client asks you to pay (to the

company and not to any individual) for the privilege.

5. Systems Integrators exercise a lot of influence and are difficult to work with as they need to win big deals; something that start ups may not have.

This means that life is difficult for the Indian enterprise software startup. They fall in two clear camps. The first one has relationships with a few key clients due to past engagements of founders and key employees. They are able to do business here. The second kind may have good product but lack the relationships and hence struggle. Several of them quickly start looking at overseas markets.

Entrepreneur

Most important player of an entrepreneurial ecosystem is the entrepreneur. Indian entrepreneur has come a long way in past decade or so. There is a lot more maturity, a lot more realism and a lot more flexibility and agility. Persistence was always. Put together, this is a potent combination. Indian technology entrepreneur looks a lot towards western media such as Techcrunch and thought leaders such as Eric Ries etc. to guide their action. The more experienced people are selective in what they pick up and also adapt to Indian circumstances. The less experienced persist in blind copying for much longer but adapt fast given the support provided by accelerators, various meet ups etc. Indian entrepreneurs also tend to be very polarized between tech and non-tech. For a lot of business focused entrepreneurs, a pure “techie” is something below their station – largely because they

Entrepreneurship

SINE Entrepreneurs are in a presentation session

An IIM Bangalore Alumni, Aditya Mishra has been active in start‐up circle in India. He is a Co‐Founder of leading start‐up network HeadStart. He was Director of Innovation Partner Network in TCS. Currently, he is Founder & CEO of SwitchMe, a web based service that helps people switch their service providers from the comfort of their home.

July 2013 I I 08

Design in India, meanings and thoughts intrinsic to it, and implications to startups.

Industrial design is a creative activity whose aim is to determine the formal qualities of objects produced by industry. These formal qualities are not only the external features but are principally those structural and functional relationships which convert a system to a coherent unity both from the point of view of the producer and the user. Industrial design extends to embrace all the aspects of human environment, which are conditioned by industrial production. This definition of industrial design by Thomas Maldonado is the third of a series of definitions and perhaps last one that ICSID – International Council of Societies of Industrial Design, discussed and revised in 1963.

In the Indian context, the nature and mandate of industrial design is best postulated in the concise text of Charles and Ray Eames in ‘The India Report’ which they did in 1958, on request by the government of India for ‘recommendations on a programme of training in design that would serve as an aid to the small industries; and that would resist the present rapid deterioration in design and quality of consumer goods.’ In a way, they were asked to investigate the then industrial situation and manufacturing sector, and lay down the design road map for the fledgling Indian manufacturing sector by the then prime minister Shri. Jawaharlal Nehru. In this report, Eames mentions that of all the objects they saw and admired during their visit to India, the omnipresent ‘lota’, the simple vessel of everyday use, stood out as perhaps the greatest, the most beautiful. He observed, ‘each day, the village women, with the use of tamarind and ash turned it (brass) into gold.’

He used it as a metaphor to describe the nature of relationship between a product, its users and its economic and socio-cultural environments. He narrates how the lota in its numerous forms as a water / liquid container, becomes one with the form of the user and its surroundings. His poetic narrative of the design considerations, and evolution of the design of the lota includes the following points: ‘the size, strength and gender of the hands that would use it; its transportation – whether on the head, hip, hand, basket or cart; its form as it fits the palm of the hand, the curve of hip that carries it; size of the opening and inner contour in terms of cleaning; its texture both inside and outside in terms of cleaning and feeling; whether it can be grasped if the liquid is hot; how pleasant does it feel with open as well as closed eyes; how pleasant does it sound when it strikes another vessel or when it kept down on ground or stone when it is empty or full, or when it is being poured into;

the material it is made of, the value of the material as an investment; effect of the material on the contents; the visual effect when the sun reflects off its surface; the emotional feeling of possessing it or selling it or giving it (away to others, or gifting it to others).’

This kind of eulogistic narration is intrinsic to design and illustrates the perception of a product, an object or a situation in industrial design. The nature of design is such that it implores the viewer to see deeper at a point, as well as beyond the point. Thus, it might now be amply clear that the design thinking is based on an ability to look beyond the obvious, see the users as to what they do, and what they don’t, hear the words spoken as well as the unspoken, and understand the explicit as well as the implicit. Design Thinking helps in understanding the stated as well as unstated needs, requirements and desirables of people in the context of products as well as services. This ability of design evolves from the design methodology, which trains the designer to objectively appreciate and identify with the user, to role play in situations and to empathise with the user. These aspects of design education help the designer have a holistic view and address issues of the user of a product or service undertaken to design.

Designers get trained to systematically identify the latent needs of the user, user groups and communities, and to gain knowledge about preferences, peculiarities, psychographic profiles as well as anthropological insights of subjects they intend to design for. These abilities help in extrapolating inferences, forecasting trends and identifying future requirements of users with respect to products and services. Design laterally ingrains the ability to visualize the future and design, redesign and reposition accordingly.

Tim Brown, CEO of the celebrated design firm IDEO shedding light on design thinking introduces ‘Design as not just about creating elegant objects of beautifying the world around us, the best designers match necessity to utility, constraint to possibility, and need to demand. These design thinkers rely on rigorous observations of how we use spaces and the objects and services that occupy them; they discover patterns where others see complexity and confusion; they synthesize new ideas from seemingly disparate fragments; and they convert problems into opportunities.’

Epoch for Enterprise and Innovation: Free market Economy and Startup Enterprise.

The post liberalised economy since the early 90’s presented the Indian industry the opportunity to offer

The Design ‐ Startup Synergy

By Prof. Sandesh R

Design

We need to infuse design thinking in startups and establish an early synergy between to the two.

July 2013 I I 09

the massive Indian middles class all the benefits that come with open markets. Best of technology and services suited to, and at times tailor made to suite the sensibilities of the ever demanding Indian consumer were only a few aspects that came up with the onset of the open market. The user became the consumer and the demanded the best. Gone were the days when a buyer had to book a scooter, a car, a gas or telephone connection years in advance and eagerly wait for his turn to come up. State owned enterprises, undertakings as well as private holdings which monopolized the market with limited range and quality of products and services in the pre liberalised era woke up to the fact of a competitive and customer centric open market and realized the need for creating individual distinct niches to convince and coax the formidable Indian middle class haggler into buy their products. They did this by offering the best they could, in collaboration with the top western brands as their Indian subsidiaries and partners. This also paved the way for transfer of cutting edge technology and production rights and subsequently, the institution of research and development centers on Indian soil, and it included design based RnD to understand the Indian consumers. Thus the best of design from the west found its way into Indian B town living rooms, and as a result of this, gave the Indian consumers a new awareness of product aspects such as quality, aesthetics, user-friendliness, ergonomics, knock-down, do-it-yourself, so on and so forth. These were all aspects of design which hitherto had not been a matter of choice for the Indian buyer. Established enterprises took some time to wriggle out the license raj slumber and woke up to a daunting and demanding, design led repositioning of themselves. Some repositioned as SME’s, some as large industries groups and others as innovative business houses with strong IT linkages. Definitely not easy, but the resilient nature of the pre liberalization era economy allowed them to embrace the new reality and see opportunity in design and innovation and pursued a user centered approach which had acquired great currency in the new market paradigm. In fact Time magazine had a glossy mirror printed on its front cover for its person of the year edition in 2006, indicating every single user and contributor of the web was the actual person of the year. This became the leitmotif of the era in which the user, the buyer, consumer was accorded paramount importance. Unfortunately this opportunity to reconfigure the enterprise in a phased manner to appeal to the design aware consumer is not available as an option for the new starters in enterprise, the startup entrepreneur. Starts up enterprises today find themselves born into an already design rich, innovative, experiential and immersive environment. Ambitious startups, desiring to make it really big or at least reasonably big

enough, do not have the option of trying to survive without design and innovation until such time that they muster enough courage and resources, and get ready to whole heartedly embrace the design paradigm. Design and innovation, and the willingness to explore design potential form the DNA of current market.

The current generation of youth was born in this cusp of economic reform, and grew up in an environment of multiple brand choice, and has developed an intensely eclectic attitude and temperament as far as buying is concerned. They demand only the best, the most use friendly, the easiest to operate, the most comfortable to use, the most value laden, aesthetically good looking, most attractive, best suited to their personality, so on and so forth. Youth, even in remote rural clusters of development deprived areas such as Gadchiroli, be it educated or uneducated, employed or unemployed are a moving citation of the collective eagerness to learn and login into new technology through mobiles, internet and the social media. They see this as a way to catch up with the progress in society. The market is reaching with out with design and innovation efforts to woo such vast groups of people of varied kinds.

The Startup Outlook vis-a-vis Design and Innovation Startups need to see design based innovation as stem cells. Cells, which they can use to infuse, generate and regenerate innovation in all organs of its enterprise, and enable free and organic growth. The startups need to chart out a plan right at the inception. They would have to decide whether they would like to board the bus of innovative enterprise or not. This decision would be the deciding factor between them becoming an Innovation Driven Enterprise (IDE) or a Small and Medium Sized Enterprise (SME). While both the sectors have their significance, the distinction is very aptly articulated by Dane Stangler, Kauffman’s director of research and policy, ‘Understanding Differences in the Types of Entrepreneurship in the Economy.” From where he stands, there are, in fact, two distinct sets of entrepreneurs doing work in the U.S. today: the innovation-driven enterprises (IDEs) we commonly call startups, and the small and medium sized enterprises (SMEs) we generally (and sometimes derisively depending on who you’re talking to) funnel into the small business category.’ He further adds, ‘While both groups of businesses (and the entrepreneurs who develop them) can provide valuable products and services and create jobs for their communities, it’s the innovative tech companies who stand to have the biggest impact on the jobs economy—but only if they succeed.’ The Kauffman report delves further, ‘What it

Design

July 2013 I I 10

does most significantly, though, is draw a line in the sand for entrepreneurs. Small businesses (SMEs) are defined as those that don’t require an innovative product, process or business model to succeed. Their sexier step-brothers and sisters, the IDEs are those that focus on building competitive advantage through innovation.’

Positioning as an SME would allow stable businesses, linear growth with quick response systems and positive cash flows but this will also ensure a limited business profile and stymie long term growth potential. On the other hand the IDE option would ensure that the well educated, well traveled, entrepreneur leads the enterprise on the fundamentals of innovation and a creative culture with the potential to grow tall and make it big.. one day. An IDE would first firm up its enterprises and outlook as a knowledge and innovation lead company and not prematurely aspire to make wind fall profits.

Establishing itself as an IDO would require the presence or the inputs of an innovative mind. Design education instills innovative and creative abilities in its students. This engrained mind has the ability to look at a system with all its sub-systems, components and sub components; its cultures and sub-cultures and appreciates their significance. Design thinking needs to be part and parcel of an IDE and not be brought in sometime later as a matter of course correction. According to Silicon Valley angel investor Dave McClure, ‘Design needs to be one of the top priorities for Internet startups, not an afterthought. These days, as McClure explains in a recent BusinessWeek.com article, ‘the technical expertise it takes to engineer a basic back-end framework is at a much more accessible level than it was in years past, which means payroll dollars can be better spent on masterful designers. "It's actually pretty easy to write a Web-friendly app or Web site these days," writes McClure. "But it's still incredibly difficult to create visually appealing interfaces and, beyond that, to design them in ways that are compelling and engaging, drive calls to action, and are measurably adept at getting more customers to use your products.”

‘The importance of design thinking in higher education, especially in business schools is more significant today with design thinking courses and design projects being included as part of MBA curriculum in universities across the globe to enable the business student to also appreciate the nature of design thinking and innovation as a strategy. The Haaso Plattner Institute of Design at Stanford, The Haas School of business at Berkeley, and the Rotoman School of Management at the University of Toronto, where business school students work directly on design projects. The California College of the Arts in San Francisco offers an MBA in design strategy alongside its programs in paining, printmaking,

and photography. There in now a critical mass of business school graduates whose training has prepared them for the unconventional practices of design thinking.’ Tim Brown says in his book, ‘Change by Design’. Startups as well as angel investors and hedge fund managers and other investors need to be made aware of the fact that design thinking ought to be an integral part of start-up to ensure an initially steady and subsequently exponential growth path. To be able to reap the benefits of this exponential growth, the investment for a perhaps expensive design thinking needs to be addressed. Weather to have design inputs at the early stage or at a mid stage should be a matter of intense and thoughtful deliberations between all the stake holders. The increasing number of design schools in India, currently 23 and growing, both at the under graduate and post graduate levels will ensure the availability of a wide spectrum of potential design employees, consultants and even partners and co-founders.

Awareness of design potential, it pivotal role, and substantial contribution in the context of business startups and market positioning is being appreciated more than ever. 500 Startups, an incubator and early-stage investment entity started the Designer Fund around 2011, with the goal is to invest in startups founded by designers. Enrique Allen, the firm’s designer noted that many successful startups, including YouTube, Tumblr, Android, and Flickr were founded by designers. He said, since designers have “a deep understanding of people’s real problems” and are “paid really well to make what people really want,” compared to many startups that “fail because they make what people don’t want.”

An early Engagement

An early stage design inputs can create a distinct corporate identity and professional outlook. The startup may choose from a wide range of graphic artists available for this job but a good designer who cares to imbibe a philosophy in the corporate identity can give an excellent head start to the enterprise with a professional, premium league look and feel.

As the anecdote goes, in 1971 Phil Knight, the head of Nike had paid a graphic design student 35$ to design the swoosh logo of Nike. Much later when Nike became a formidable and popular brand despite the prevailing German brand Adidas, Phil presented Carolyn Davidson an undisclosed value of Nike stock and a custom made Nike ring as a mark of his gratitude for the identity she gave to his company. The identity which he had not liked but nonetheless trusted her design thoughts and went ahead with it.

Design

July 2013 I I 11

The same swoosh logo went on to become one of the

most popular sports identity across continents.

Indian Cases

Closer home, the coming together of the first

director of IIM Ahmedabad, Ravi J Mathai and Ashok

Chatterjee lead design thinkers from NID ahamedabad

ushered in the first of its kind phenomenon in remote

Jawaja block of Ajmer in Rajasthan. 200 villages

which included 80,000 people from the draught prone

districts of Rajasthan were organised as a cooperative

to eliminate toxic stages and to streamline production;

and to design a contemporary range of leather products

based on traditional skills and abilities of the craft

community. The production is managed by a co-

operative and the produce is exported globally. No

better example to illustrate collaborative efforts

between design thinking, entrepreneurship and the

social route to self reliance and viable business

development.

Further association of design and craft

enterprises have shown fabulous results in

repositioning traditional lacquer wood finished toys

from rural clusters of Channapatna in Karnataka and

Etikoppaka in Andra Pradesh. A cursory glance on

google images for these toys will show up a huge

number sites and suppliers of the GI registered

traditional toys. One can only guess the revenues that

might be involved in these production centers.

Fabindia founded by John Bissell with its more than

170 outlets, Industree Crafts, founded by Nelam

Chibber recently designated with the title of Social

Entrepreneur of the Year (SEOY) Award 2011 by the

Bhartia Foundation and the Schwab Foundation for

Social Entrepreneurship, and Mother Earth are another

set of examples which essentially came into existence

through design thinking and with active involvement

of designers.

Final Submissions

The affinity among designers to become

entrepreneurs is simply great. A vast number of alumni

of IDC and NID are already there as established

entrepreneurs having design studios, production units,

braving it out in the harsh business environment. In

fact this cadre of designers went the entrepreneurship

way long before the incubation concept was in

currency and entrepreneurship in vogue in India.

They also faced an indifferent business environment

as well as a diffident society both of which were not

very clear about the contribution of the designer to the

economy. But now, the perception of design with

respect to enterprise in general and startup in particular

has changed drastically. The National Design Business

Incubator- NDBI was instituted at NID about 9 years

ago with support from the department of Science and

Technology, Government of India. NDBI today has 23

incubates in its fold from across design disciplines.

Society for Innovation and Entrepreneurship-SINE, at

IIT Bombay has many startups eagerly tapping design

inputs and has at least a couple of incubates bases on

design based innovation.

With this, it comes across with abundant clarity,

that the roles of the designer and the startup

entrepreneur are naturally complementary to each

other. We need to infuse design thinking in startups

and establish an early synergy between to the two.

This will help a lot in ensuring startups to figure out

the flair of the market, the pulse of the consumer and

success as an IDE.

Design

Prof. Sandesh R teaches poduct design in industrial design center (IDC) in IIT Bombay, He spcialises in social sector.

July 2013 I I 12

The 5 P’s of great presentations

By V C Karthic

Thinking of the audience as a group of friends that are keen to hear what you have to say helps too.

Tip: Pick a few friendly faces (even if you have to look really hard) spread through out the audience before you get on stage. Keep maintaining eye contact between them by turns. Helps you smile plus the majority of the audience thinks you are looking at them.

Passion: After all the preparation in the world, truly

great speakers love the idea or concept that they are trying to

communicate. If you are passionate about what

your are saying, it will shine through. No technique or shortcut

can make this up for you.

Tip: Don't confuse passion with emotion. Being angry is

not the same thing as being involved.

A quick cheat sheet for you to start making great presentations Now.

Skills

Plan: For both the audience size as well as their

expectations. Pitching your idea to a set of 5 investors is completely different from getting 500 people to vote for your startup in a large competition. Do your homework to make sure that your intended audience is deriving value from what you have to say.

Tip: Start strong, have a solid middle & a memorable ending. If movies can do this for 2 hours, you can do it for 20 minutes.

Plain: Too often, people get carried away with using Powerpoint's features. Remember that any software is just a tool. Simplicity is also the ultimate sophistication. The real impact of a presentation is what the speaker is saying, how they say it & most importantly, what the audience understands.

Tip: Ensure that you follow the 30-20-10 rule. 30 point text in your slide, 20 minutes for the entire presentation & not more than 10 slides. This forces you to use graphics on the slide, keep it short & more importantly – your audience is now listening to what you have to say, not reading (faster than you) from your own slides.

Practice: The default behavior for most presenters is to put their thoughts down on a slide & then land up on D-day & throw up content on an unsuspecting audience. The difference between good & great presentations is practice. Think of a presentation like stand up comedy. What looks effortless & spontaneous on stage is actually the result of studied practice & timing.

Tip: For every minute of presentation run time, you should ideally put down 10 minutes of practice. In front of the mirror, with helpless friends & a mock run at the actual venue before the audience arrives are great iterative options.

Pause: Since public speaking is ranked second in most surveys as the thing that people fear most (Death being first), some butterflies in your stomach are par for the course before going on stage. A quick sip of water & a few deep breaths should take care of most palpitations.

July 2013 I I 13

V C Karthic is a Mumbai based serial entrepreneur . He also serves as a mentor to a couple of incubators in the country. He is currently in the middle of his latest start up.

Startup Capital ‐ 101

By Sushanto Mitra

tarting up is not easy and one of the first things you Susually need once you begin is Capital. It is the building block of any business and the lack of capital is often the foremost reason for startup failure. The question really is how much do you need, when do you need it and from where. Part of the complexity of the problem lies in fact that there are no straight answers to any of these questions apart from the limited availability of capital for startups. So where to start is with the idea itself. How much will it cost for you to reach breakeven with your product or service. When you think of a business such as one person plumbing services, obviously you don’t need much capital. There are no major fixed assets or salaries to pay. There is no burden of fixed rentals or utility bills. Apart from your salary, travelling and phone expenses, there are few other expenses. So if you were to estimate the break-even point, it could well be within a few weeks and if you are lucky, maybe on the first day itself. On the other hand, if you are thinking of setting up an airport, you may be lucky if you break even in the third or the fourth year of operations. The initial capital required to fund the infrastructure costs and losses until break even would run into a few thousand crores. For most businesses, the two key things therefore to focus on is to estimate how much capital you would need to buy the things and services for starting operations and then how long and how much money you will take you to become profitable. The sum of these two should give you some idea of the amount of startup capital you will need to begin. Next of course is usually the harder task to find it. The first money could of course come from you whether it is cash that you can put into the business or the salaries that you forgo perhaps in the first few

If you have a client who is willing to pay advance that could be a funding option too. Then there are friends and family who have faith in you and your business, and could give you a loan or become a partner in your business. Usually, for most of the entrepreneurs, this money is not enough . They need to look at external sources such as banks, angel groups and venture funds. Bank loans are available to startups with or without collateral. Some private institutions also support early stage companies with loans in India. These sources are of course limited as more financiers prefer to lend to companies with track record and often want some security from the borrowers to cover the principal amount. While these sources are few, the documentation is daunting and time consuming. It is an area worth exploring, especially, if you think you can start paying back from your operations in a three to six months time. What is perhaps the source, most new age companies look for is venture capital from early stage funds and angel groups. It is also the least understood of all money sources. First thing to know about angel groups and venture funds is that it’s not a free money. While there are many advantages apart from the money they bring along with it, it also comes with a lot of terms and conditions and is actually the most expensive source of capital. Venture Funds and Angels own a part of the company and if they don’t achieve their expected returns, they usually have a right that gives them the power to sell the entire company to recover their principal and desired returns and only thereafter do the other shareholders such as yourself get their share. If, however, you are comfortable with such clauses then you have reach out to the early stage investors. Here, the first thing you need to check is if your business is suitable for such investors. Some of the things these investors would like to see are :

Does your company have the potential to become a large company say of 200-300 Crores?

Why would customers choose to buy your product over competition and over time?

Would your operations be sufficiently profitable to meet future expansion? Would you be able to leverage economies of scale?

Do you and your team have capabilities to execute ?

If entrepreneurs think Facebook got funded by every VC, they met, then they need to think again.

Capital

The Author (far left) is in a start‐up gathering

( Continued to page - 01)

July 2013 I I 14

No Cost Marketing for Start‐Ups

By Pradeep Anand

Assumptions First, in almost all situations, the product concept is already set. Entrepreneurs have typically recognized an opportunity around a product, device or service and the entire venture is built around this concept.

Second, founders of start-ups are the most enthusiastic people you can meet. Their beliefs are stronger than any evangelical preacher on a Sunday. Sometimes, they come pretty close to being seen as charlatans but that really isn’t true. Entrepreneurs live so much in their own world of possibilities that sometimes, the realities of the business world escape them.

Third is a consequence of the second. Growth projections are ambitious and sometimes unbelievable. They seem like the proverbial pot of gold at the end of the rainbow. But, in the entrepreneurs mind, these “hockey stick” projections they are very achievable.

Best Source of Cash

The oil that greases the skids of growth; the fuel that revs the engines of growth is cash and almost all start-ups are cash poor. Cash flow is the root of the success and failure of most entrepreneurial ventures and there are several sources of cash.

But, one entity stands out! It is the most reliable, long term source is one who has 100% ownership in your company but has 0% equity. It sounds like a paradox but isn't. That entity is the customer.

Customers are the ideal source of cash. You provide products and services that meet their needs, and in return you get paid in cash. This then begs the question: How do you create the momentum to tap this best of all cash machines?

It is like the proverbial chicken and egg, which comes first, syndrome. It is the general perception that you need cash to create market pull, which then sets the juggernaut of cash flow into motion.

The dilemma—how do start-ups create market demand and open this faucet of cash-flow, with limited short-term resources?

Wise Start-Ups

It has been my experience that wise start-ups scale back their ambitions and create intermediate milestones. They focus on intermediate goals and use resources sparingly for the biggest impact.

All entrepreneurs are smart but the successful ones use a rifle shot approach in shooting prioritized targets rather than a shotgun approach and blast expensive pellets over a broad landscape. The wise ones pick and choose their objectives, and then focus their resources on selected ones; locally rather than globally.

Additionally, successful entrepreneurs recognize that there are more aspects to marketing than “marketing communications” and work on all of them.

No Cost Marketing Without going into a course on marketing, let me suggest that marketing is a mix of several activities focused on the customer.

1- The customer has problems, wants or needs that the vendor satisfies with a combination of products and services.

2- Pricing is the translation of value received by the customer into profits for the enterprise.

3- Promotion is deployed to create awareness, interest, and credibility for the vendor.

4- And, in an ideal situation, sales and distribution picks up where promotion stopped- sales takes the sales cycle from customer interest to purchase and repurchase and repurchase, ad nauseam.

Attempting to address all aspects, in depth, is very expensive. The cash strapped entrepreneur prioritizes and focuses, strategizes and implements simultaneously; implementing not low cost marketing but No Cost Marketing.

No Cost Marketing for start-ups is like the Zen of marketing. It is all in your head. It is an attitude. It is a focused approach to marketing, deploying and directing existing resources for maximum impact. Like a marksman taking aim before letting the arrow take flight.

Like most activities, a little homework helps a lot. The benefits more than compensate the effort. So, aim before you shoot.

Like everything else in the business world, No Cost Marketing begins with the customer and markets.

Focusing, Segmenting

The savvy entrepreneur recognizes that the entire market cannot be addressed all at one time. Typically, there is an initial phase of frenzied activity,

Marketing

If you take care of customers, they'll take care of you in very rewarding ways.

July 2013 I I 15

where the entrepreneur goes and sells to anybody who will listen. But, the savvy one quickly realizes that there are common characteristics for customers who say yes and buy, and those who say no and reject.

Delineating groups of customers who have common characteristics is segmentation. And these common threads can be demographic, psychographic, education, preferences, hobbies, you name it. No Cost Marketing requires a determination of customer segments and to prioritize them in primary, secondary and tertiary markets.

These primary, secondary and tertiary markets are like dominos. When primary dominos fall they create momentum for secondary and tertiary dominos to fall.Another critical point regarding markets is that successful start-ups focus on customers that they are close to. By accident or design, they play to their strengths and natural advantages like existing relationships and proximity. At the outset, pick customers that you are close to you, so you can take care of them at minimal cost. Or if you can't do that, move closer to them; if not physically, then do so virtually. Today’s and tomorrow’s technologies are destroying physical distances in unimaginable ways. Being closer to customers is an attitude, while picking segments is the first slice of focus.

Small Steps

The second slice of focus is hard to do: it is to discipline the start-up to focus on only 5% of the market. An entrepreneur is so glued to the universal applicability of the technology that picking a subset is emotionally very hard. And, 5% seems too small a number.

Long journeys begin with small steps and the successful entrepreneur focus on innovators first. Who are these innovators? And how can you find them?

My knowledge of consumer behavior is theoretical and limited. But, I do know that innovators march to a different drummer. In business-to-business situations, innovative corporations are easily identifiable, based on their historical behavior. It is imbedded in their corporate culture and these firms show a marked propensity to change.

Every customer company is in quasi-equilibrium between creating a market pull for new products and an inertial force that restricts or limits this pull. A successful start-up focuses its attention on points that create disequilibrium between the pull for their products and the inertia in the firm.

Market savvy entrepreneurs do not necessarily

pursue market leading companies as their initial

customers. My advice to entrepreneurs: Focus on a

David, not a Goliath. A David needs to constantly seek

innovative technologies to keep sharpening the

competitive edge. A Goliath can usually afford to wait

and watch before adopting a new technology. While a

Goliath can afford to wait, a start-up cannot.

Time is a limited resource for entrepreneurs and it

is best spent with firms who have a higher proclivity to

adopt innovations.

A key element in this focus is that early adopters

meet a major objective for a vendor—they generate cash

for the short term and the long term.

The short term reward is obvious—you sell, they

buy, you invoice, they pay, and you take it to the bank,

and you pay your much overdue bills.

The longer term impact though is far greater

because they also serve as beacons that followers in the

industry look up to. By association, they lend credibility

and a halo effect to your venture. The followers then

come on board, first in dribs and drabs and then, if the

job is done well, as an avalanche.

The bottom line is that successful start-ups pick

their customers carefully. They are short on time and

cash, so they choose their targets carefully and aim for

the bulls-eye, for faster time-to-cash.

Product/Solution

Most start-ups believe that their products are unique and

different. But are these differences important to the

customer? Do your products add value to the firm? If

yes, can you express this added-value in monetized

terms, in actual currency? Do customers have

compelling reasons to buy your product?

In every client engagement, the first thing I do is to walk

through a product positioning process. It has the

following steps:

1. Who is the product for?

2. What do these customers need it for?

3. How does the product meet these needs? There

better be compelling reasons!

4. And how is it different from competition? Not just

features, but benefits, including monetized value of

these benefits.

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July 2013 I I 16

If product is different in important, monetized ways, your chances of meeting the ambitious growth projections are high.

Speed to Market

Most successful start-ups deliver quality products, fast. Most successful start-ups have spent time and other resources in fixing design and manufacturing issues so that they deliver quality and their products are first out of the chute, before competition can react or even awaken from their slumber.

Being first gives you the best marketing research results that you can hope for. Customers use your products and give you instant feedback, which helps you get further ahead from your competition.

Being first also brings forward future cash flow and profits. Just like the opportunity cost of delays can be infinite, the benefits of being early can be infinite. Being early by a quarter can increase your cash and profits significantly, in some instances, because of the cascading effect, the impact can be several tenfold to hundred fold.

In the business world, Speed Kills the Competition.

Positioning, quality and timeliness are just three important product related issues. That is just the first layer of products. Over time the device is a small part of the bundle of expectations that customers buy and the firm has to change to deliver these newer expectations. The device dominates for a short time and then the compelling value being sought by customers is lies elsewhere. Despite our best efforts, “Product” alone don’t have all the marketing answers. No Cost Marketing also requires smart and astute pricing.

Pricing

Pricing is taking the value that you deliver to your customer and turning them into profits for your enterprise. Besides value to your customer, it is also a function of the number of alternatives in the marketplace. Yes, we are all very proud of the value our products and services contribute to an enterprise. However, the biggest issue I have confronted with entrepreneurs is unrealistic perception of value. This lack of realism goes both ways—sometimes, prices are way too high and Some times, way too low. The ones who are too high inch their way down an expensive road of customer losses to competitive alternatives.

But, the ones who are too low are stuck for a long time because the forces against raising prices are phenomenal, both, external and internal to the start-up organizations. These low-price entrepreneurs not only leave money on the table for the short-term but also the long term. They suck profitability out of their entire industry. This strategy may be fine for firms focused on a low-cost strategy.

Discounts

Don’t discount to increase market demand unless you are a significantly late entrant, in which case you may be forced to pursue a low-cost strategy. It’s great to have a discounting schedule for volume purchases but unless you are pursuing a low-cost producer strategy, don’t assume that lowering prices will increase demand. If you focus on customers and recognize the inertial forces, it will be obvious that these are very strong, and pricing is one of the later factors considered in the purchase decision. The first question asked of a new product/service is: Will the product do what I want it to do? Then the question, “At what cost?” will be asked almost in parallel with “When will the product be available or be delivered?”

A Contrarian Example One of my clients, an application software company, was a late entrant in a market. Customers had very compelling reasons to buy their products and there was real differentiation from competition. However, the client was convinced that the firm’s major advantage was price because they cost less than half of competition. They believed their success was because of low pricing. When I talked with their customers, I found that “low price” was not the reason for purchase. Core product related issues, “Does the product do what I want it to do?” drove the purchasing decision. The answer to that question was a resounding “Yes!” not only for the software but for support, service, maintenance, and all the other factors that were important to purchasers of that software. They were also physically close to customers. We repositioned the product and the company, raised prices and, lo and behold, large companies who doubted the long term viability of this firm began to buy its products and the client went on to significantly increase its revenues and market share. And they lived happily ever after—for about two quarters, when competition began a major attempt to dislodge them.

Marketing

July 2013 I I 17

Marketing

In this instance a low price was not their claim to success, and for years they left money on the table and lost customers because of a bad pricing decision. Pricing decisions need to be made with due consideration to other issues in the marketing mix toassure long term viability, and success of the start-up.

Sales

Then comes the company “Push”. Or sales. Volumes have been written about the subject but let me focus and highlight one issue. It is my experience that founders are usually the best salespeople for technology companies. Many of those in technology fields need sales training but most founders are fast learners. They understand and often convey an entire range of issues that are important to the customer, in a language that customers comprehend. They create a sense of trust that customers appreciate and their enthusiasm for their products are contagious. Also, the selling process is full of trade-offs and compromises, and the smart founder has control over the variables. They recognize the opportunity, benefits and costs, and can make commitments that the enterprise can back-up and support. In the early stages of a start-up, one of the many keys to success is quick responses to customers. Founder-led short decision cycles have tremendous impact. If a start-up has correctly selected its customers, the use of a founder's resources in the pursuit of focused sales pays rich dividends. It keeps founders very close to customers and they can feel the pulse of evolving and changing customer needs. These sales in initial customer accounts are followed up with great service, support and training.

Influencers/Champions/Zealots

Also, find and focus on a few influencers who can become zealots for your products. These champions are on the customer side of the divide between us and them—between the vendor and the user. They are perceived to be “unbiased” and they don’t charge anything except attention. These champions are seen as “neutral” and when they support you, they act on your behalf and create sales opportunities and also barriers to competition.

I can go on forever about focusing on Champions / Influencers and supporting them. The benefits are numerous in creating stakeholders within customer companies. But, most important, they assure repeat sales and also act as spokespeople in your effort to create credibility for your start-up. They become one of the most important elements in your marketing communications efforts. Most start-ups focus only on products but what a customer buys is a solution to a problem. The customer evaluates all aspects of a vendor, of which the product is only one part. Credibility of a vendor is the biggest issue that a start-up lacks; and it helps to focus marketing communications on enhancing the credibility of the firm. No Cost Marketing uses the cheapest, neutral sources you can find to promote evidence of success. Here again choosing the right customers that laggards will follow is the key to success. Your customer champions should be on prosceniums, at lecterns and podiums or any other soap box to talk about your products. The higher the visibility and credibility of the person, the better. Every firm you work with in delivering solutions to customers, like business partners, are usually helpful in promoting you, your firm and its image as a credible vendor. It is in their self-interest to do so. So, focus again on enhancing your image—it’s okay to drop names of Fortune 500 companies or movie companies as your customers. God knows that wouldn’t consider you, unless you were good!

Also, use the media—they are always short on case studies and success stories—feed them. Industry analysts are in the same situation—feed them with evidence of success. It is important to cultivate them because when you go public, they are right there by your side, supporting you.

No Cost Marketing is not about not spending money. It is about being smart, being focused and being clear about every objective regarding every element of the marketing mix. It is about not wasting resources, and being very specific about how they are deployed. It is about leveraging every action for maximum impact on accelerating your growth.

No Cost Marketing starts with customers and ends with customers; competition is only a constraint or an irritant, albeit a significant one that keeps us honest. I have always believed that if you take care of customers, they'll take care of you in very rewarding ways.

July 2013 I I 18

Regulator

registration. The portal is maintained by the Ministry of Corporate affairs, Government of India.

• Thereafter, an applicant need to get the company name approved by the Ministry. The process is is first to select a suitable name which is indicative of the main objects of the company. The name should not

resemble the name should not resemble the name of any other already registered company, and it also should not violate the provisions of emblems and names (Prevention of Improper Use Act, 1950). Name availability can be verified online on a portal.

An online application need to be made to the concerned RoC to ascertain the availability of name in eForm1 A on the portal with necessary fee. Digital signature of the applicant proposing the company has to be attached in the form. If proposed name is not available, the user has apply for a fresh name on the same application.

• Once the company name is approved , applicant can register the company by filing the incorporation form depending on the type of company. Application for registration of the new company can be made by filing the required forms (that is Form 1, 18 and 32) within 60 days of name approval

• Draft of the Memorandum of Association and Articles of Association be submitted with the RoC for their vetting. Memorandum of Association lists the objects of the proposed company, and Articles of Association is a document containing rules and regulations for conducting affairs of the company.of Association be submitted with the RoC for their vetting. Memorandum of Association lists the objects of the proposed company,

and Articles of Association is a document containing rules and regulations for conducting affairs of the company.

• Once approved by RoC, a final copy of the Memorandum and Articles required to be stamped with the appropriate stamp duty, signed and dated by at least two subscribers.

• The following forms attached with the mandatory documents listed in the eForm to be submitted online: the mandatory documents listed in the eForm to be submitted online:

Declaration of compliance - Form-1

Notice of situation of registered office of the company - Form-18.

Particulars of the Director's, Manager or Secretary - Form-32. • After processing of the Form is complete and Corporate Identity is generated obtain Certificate of Incorporation from RoC.

If a company is to be registered as a a Public Limited Company some additional steps are needed. Details for a company registration can be viewed on www.mca.gov.in

How to incorporate a new company ?

Following information has been compiled to guide budding entrepreneurs those are interested to incorporate a new company in India.

Steps to be taken to get a new company incorporated

• To register a company, an applicant first need to apply for a Director Identification Number (DIN) which can be done by filing eForm for acquiring the DIN. An applicant would then need to acquire Digital Certificate and register the same on the portal maintained for company

Online search can help an entrepreneur to know more about company registration process.

Visit us on :

www.facebook.com/sineiitb

Once the company name is approvedapplicant can register the company by filing the incorporation form depending on the type of company.

July 2013 I I 19

Team

Building a Startup Team Open and clear communication among team members about responsibility related goals helps always.

Every business starts with a dream, but it takes more than just a dream for a startup to grow into a successful business. They have many challenges, both internal and external. Internal challenges are about putting up decision making process, information systems, operations, parameters of dealing within the team (co-founders) in place. External challenges are about attracting talent and building team, funding, buy-in from customers, regulatory and compliance challenges etc. Focus of this work is on challenge of building team.

Co-founders interest

While initial set of people who join hands are the people who have been contemplating on an idea for quite some time, doing market research to validate their idea/value proposition, customer buy-in etc. and may have common vision, but they rarely spend time thinking “how would business be organized internally ?”. They forget that organizing internally in an unambiguous manner is as critical as answering the other questions about products/services, pricing, customers etc. Typical questions they need to ask at this juncture are:

• Who will be the CEO among the co-founders ?• Who will do what - clarity of roles. If everyone tries to do everything, it is a great recipe to fail.• Broad parameters of internal operations – sense of mutual respect in dealing with each other, deep rooted trust, openness, transparency, honesty etc. Differences in views should be put to each other in a proper manner (not derogatory manner).• Who will have final decision making power, if opinions on a subject differ (someone in team needs to ultimately decide!) ?

• What would be the financial structure – contributions from each co-promoter, ownership structure of business and profit sharing aspects. Answer to such questions needs to be addressed at some point of time in the life of a business organization. Hence, it would be ideal if these are answered at the bootstrapping stage of startup. It is not just a piece of paper which has documented “taken decisions” and is buried somewhere, these points needs to be the guiding force for co-founders for rest of their entrepreneurial journey. Indeed, the principles based on these points are to be oriented with initial set of external people joining the business and should be abided continuously in actions.

Next challenge is to enroll external people in business vision. In reality , vision is one thing; and, implementation of this into practice is another thing. Both these aspects warrant different mindsets,

By Manish Bansal

competency and team levels. While vision may be an individualistic exercise with deep sense of experience with a product or service, implementation of this into practice requires execution skills and team efforts.

Here, startup needs right team.

Another burning question that haunt founders continuously is “What are you searching in prospective candidates ?”.

Is it great talents available at affordable salary, passion, entrepreneurial mindset etc. ?While founders wish is justified, one should look from the point of view of a talented employee.

It is found mostly that employee joining startups look for excitement of job, variety/diversity of work – no monotony, speed in the decision making process, ability to use their multidimensional skills, deferred upside in terms of equity/stock options, freedom etc. Even an employee might be joining a startup at the cost of working in a reputed company and attractive perks.

Team members with their mentor

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Team

facilitate decision making with relevant information. It would be prudent to work with the prospective employee on their financial issues, if latter permit. It is better if a founder can get prospective employees who are not the sole bread earner of the family. Otherwise, there may be pressure, sooner or later, on them to walk out in case of financial difficulty.

Structure of an organization is another important point to think through clearly. It is always recommend to divide the team in three broad layers:

• Advisory team• Founders – core thinking, operational and execution team; and• Junior team.

Advisors and Mentors

Advisors and Mentors should consist of people with proven experience and credibility. These people should be chosen carefully, generally, from your existing relationship base. Their role is to give guidance to the team as and when required. They are envisaged to work as mentor and connect team with relevant resources. It is important for operational team to give them distinguished position, comfort of not doing anything

which may malice their image and tap their offerings meticulously without wasting their time. While these people are only showing their kind gesture towards business and have not joined for money, they should be appropriately and adequately compensated for the services, if financial of business so support.

Founders

Founders and some subsequent joinees form the core operational and execution team. These people are almost at par (always choose people smarter and competent than you). These are the people with 10-15 yrs kind of experience and are looking for meaning in their working. They can be excited with the opportunity space and their potential contributions. These people should primarily be engaged on equity and profit sharing basis . Startups can not afford their salaries from alternative platforms. It is important to give them proper designation to maintain dignity for the experience and pedigree they come from.

Junior team

Junior team members are either fresher or have an experience ranging from 1 to 3 yrs. No matter how much you are

This exercise is like understanding a customer. If you understand and analyse this properly, then it would help you structure your conversation with prospective employee fruitful way.

Co-founders should contemplate on following, when it comes to attracting talent:

• What competency do we need (complimentary skills should be explored).

• Who can be recruited from known circle (You can get good reference from your contacts)

• What should be the structure and team hierarchy of the organization.

Clarity on competency and open discussions with the prospective employee are key factors here. Founders’ role is to excite/encourage prospective employee with the opportunity, clearly define their potential contributions and how would joining startup add values to their profile and career. Founder should show them both advantage and challenges of joining a team of startup. While facilitating the decision making at the end of prospective employee, it is important to clarify that they need to take their own decisions and founder’ role is to

( Continued to page - 01)

Clarity on competency and open discussions with the prospective employee are key factors here.

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Cover Story

Innovation to Enterprise

A s office hour breaks, an unusual crowd gathers on 3rd floor of CSRE Building in IIT Bombay in Powai, situated in the northern suburbs of Mumbai, in Western India. The youth gather there are not student. They are there with a dream in eye and hunger in belly to change the world with innovation, entrepreneurship and technology.

The 3rd floor of the CSRE Building houses an unusual set up- an incubation centre, Society for Innovation and Entrepreneurship. (SINE) . There is also a similar facility on the fourth floor of KReSIT Building in the same campus.

At the moment, 16 companies are being incubated in both facilities of the incubator. The incubatee companies are from broad spectrum of technology domains that includes solar, mechanical engineering, audio technologies, marketing solutions for retail chains, engineering software, social media , nano technology and technology education. SINE companies, which include both graduated and ongoing incubatees, have a combined annual turnover of Rs 100 Crore.

The story of SINE has a root in IT boom in India. Prof C Amarnath, the former head of SINE says, “ During IT boom period in India in late 90s, IIT Bombay started a pilot IT incubator to explore success in entrepreneurship. Later, the success lead to setting up of a full-fledged technology incubation center. SINE was formed as a technology

With 9 years of existence, Society for Innovations and Entrepreneurship (SINE) IITBombay has incubated 46 companies creating over 1000 jobs .

By SIgNEture Team

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