Starting a Venture - Common Ways PDF

Explorations in Entrepreneurship Prof. Suresh Bhagavatula Module 4 Starting a Venture -...

Explorations in Entrepreneurship Prof. Suresh Bhagavatula Module 4 Starting a Venture - Common Ways So, we are here for yet another session. In this session, we are going to talk about ways of starting, right? So, we are going to look at, are they multiple ways? Because we have over the course duration, you would have seen that people have different ambitions, people came with different interests, people had different life situations that got them. So what are the ways in which we could start to look at in order to start? I kind of put together seven. Maybe your all can spend some time and then think about it and identify some other ways in which people have started these ventures. Seven ways is, first is what is very popular? In the literature and the media outside is, I want to disrupt something. I want to disrupt this industry. I'm, I'm here for a moonshot, right? Those, those are the terms that are being used. Blitz scaling, network effects, raising lots of money, series A, series B, series D, series G, right? We'll know what these are later. These are basically the chunks of money. Series A is very small, series H will be like very large, like hundreds of millions of dollars. So it's called putting a dent in the universe, right? So kind of a term that Steve Jobs used saying, well, let's put a dent in the universe. So there are people who would like to spend time and effort to change the way in which things are and say that I really would like to create a possibility where world looks at me and my venture as the game changing point, inflection point, after which things are not the same, right? Look at Flipkart, kind of created a large value for companies in terms of legitimizing India as a source of markets. So the number of e commerce started to take off, India is a nice hot place to invest, started to take off. So if you look at life, entrepreneurial world outside Flipkart and after Flipkart. There has been this game changing idea of what entrepreneurship is. Game changing perspective, not just for entrepreneurs. But for investors, as a career choice, as an acceptance socially, as a choice, right? That kind of change. So, in many ways, some of these ventures will say that we will change the world. Like with Ather, they came and created this entire large market around electric vehicles. Vehicles are © All Rights Reserved. This document has been authored by Prof.Suresh Bhagavatula and is permitted for use only within the course "Explorations in Entrepreneurship" delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures, scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying, recording or otherwise – without the prior permission of the author.  Explorations in Entrepreneurship Prof. Suresh Bhagavatula Module 4 very good. I quite like them. There are a whole bunch of others, but I'm not really sure whether I should buy an Ather. But I'm quite tempted, right, because I like that. And that's what they did. They said, let's put a dent in the space and create an entire new space where nothing exists. Right? If you look at Amagi, Zoojoobe, these are companies in India. Or Flipkart. Look at Meesho. Look at Zepto. While, so they're creating these entire new categories that none existed. They said, we're going to change the way in which that particular industry works. Change the way in which things are done in that particular industry. Right? That's putting a dent in the universe, right? Sometimes you could say that, you know what, there's a very crude term, crude term, excuse me for using it, called scratch your own itch. That I solve the problem that I have and hopefully others will also come and say, because they could be others like me. I'll just go solve it for myself. And a whole bunch of others start to come in. I heard a lot of mothers say that I had this problem. We had a PGP student, who, Mansi, who after becoming a mother realized that there's not enough foods which are safe for children, which are available in the market. Not necessarily baby food, but for children, right? Like five year old, four year old. Because there are so many additives, we don't know what are the things that are being put in these processed food. Can we have a processed food which is very, very good for children? Right? So she started this sauces company. So Mansi started this company called Truvy, which said that, you know what, I want to give good food to my child. And there are other mothers who may want to have also give good food to their children. And therefore, that's how it started. Solving the problem that I'm facing could also lead to very large markets because there could be so many others who may have similar issues, right? Usually people have a problem, I need to change my health, I need to change my diet, I need to do this. And I realized that maybe I could actually create a venture for others who are also having similar issues. Right? So, that could be the reason for starting. Then another interesting way to start is to have a job and in the evening do something else which is called moonlighting. © All Rights Reserved. This document has been authored by Prof.Suresh Bhagavatula and is permitted for use only within the course "Explorations in Entrepreneurship" delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures, scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying, recording or otherwise – without the prior permission of the author.  Explorations in Entrepreneurship Prof. Suresh Bhagavatula Module 4 One of the biggest companies in the world started with this moonlighting, Apple. Steve Wozniak was with HP when we started Apple. They went and showed this. If you all have seen the movies, they went and showed this extremely rudimentary instrument that HP decided we are not interested in this because he signed on a fine print that whatever he builds in his spare time, in spare time also becomes HP's. So Steve Jobs and Steve Wozniak went and said like this is what we are trying to build in our spare time. And they looked at it and said, okay, go ahead and build it. This seems like some, I don't know, they were just impressed with it. So he quit and continued, but so read your fine print. If you have a job, read the fine print saying that sometimes they may say whatever you do in your free time is also part of the company's IP. So be careful, but that's not a bad way to start, right? You're putting, you're dipping your fingers, toes in. It's kind of a sandbox to see whether something works or not. And only if something is working, then you're starting to say that, okay, you let go. I think it's a very safe way to start. And I would suggest for those who are starting to do something quite similar, because I suggest it quite often. You don't have to leave your job and see. You then wait and see whether there is a customer, wait and see whether there are paying customers, wait and see there are enough paying customers before you decide to let go of what is in your hand. Well yes, it is not very easy, it is not very easy because you are doing two things, multiple things, but it is much safer. The other is starting small and bootstrapping your way through, saying that you know what, let me say, let me start and see how it goes. We will look at bootstrapping in detail later, but all of you all might be aware of bootstrapping as starting with the resources that you have, whatever you have, you have a garage, you have some capabilities and see where it goes. Bootstrapping is good because early on you are not taking money from outside, you are not diluting your stake, you are not reducing your control over your own venture. Bootstrapping is very good because you control the entire firm, 100 percent is yours or 90 percent is yours, whereas if you start to take money, the ownership of your venture starts to decrease because you are giving owners ownership to others. © All Rights Reserved. This document has been authored by Prof.Suresh Bhagavatula and is permitted for use only within the course "Explorations in Entrepreneurship" delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures, scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying, recording or otherwise – without the prior permission of the author.  Explorations in Entrepreneurship Prof. Suresh Bhagavatula Module 4 While it's a risky proposition for the investors, but then if the company starts to become big, you only hold a small pie. So bootstrapping is a way in which you are going very small using customers money. And I'm sure there are lots of such examples in your cities and towns. Look around, talk to people. You will find that many people would have started using bootstrapping techniques. And then we realized there could be social enterprise, where you are saying that I am going to solve for a problem, but make money. That's another way of starting saying that, look, I don't want to be that greedy, but I want to also solve for a, solve for a social problem, or you could decide I'll solve for a social problem. I'll keep it nonprofit. I'll leverage grants. There's a lot of CSR money, so you could use CSR money and grant money to, we had companies like Anthill, Guardians of Dreams, Bridges of Sport, a Mantra for Change. These were all early companies that we incubated many years ago when we started a Not-for-Profit Incubator. These are all young people saying that I'm going to, Guardians of Dreams are saying that I'll go and change the way in which orphanages are, right? So we, they got support from MSDF, Michael and Susan Dell Foundation, for about three years, maybe three years, I think. We supported, we gave them money, we gave them money for resources, we gave money for some salaries, so that they have some subsistence money while they are trying to build this venture, early days, right? Because for social problems require a lot of attention, requires a lot of resources, and young people may not have it. So, in the past, a lot of NGOs and not for profits were started by people who are older, decided after many years of working to go start and solve a social problem. But some of these young people in our incubators, not for profit incubation that we started, which we currently call Social Orbit, Guardians of Dream, Bridges of Sport, you said, like, let's say, let's go increase sports, right? And they're working with Siddhi community in Karnataka and saying that can we make them into marathon runners because they have a little bit of an African gene. So Bridges of Sport © All Rights Reserved. This document has been authored by Prof.Suresh Bhagavatula and is permitted for use only within the course "Explorations in Entrepreneurship" delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures, scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying, recording or otherwise – without the prior permission of the author.  Explorations in Entrepreneurship Prof. Suresh Bhagavatula Module 4 was working on this. Mantra for Change saying that, you know what, there are lots of schools across the country and they don't have well trained teachers. So, can we train and improve the quality of the teachers? As in go to teachers and say we're going to train you. We're going to train you with newer ways in which teaching is done. We are going to train you with new ways and with certain aspects and theories and, and certain lessons are taught, we are going to change certain tools that you can use. So how do you improve the effectivity of a teacher? Because if you improve the effectivity of teacher, the entire education, those children who are listening will all become better, right? So Mantra for Change started that way. So, so you could look at not for profits, these are all not for profits. And then I must have talked about Rescript. It's a for profit social venture, Gud Gum for profit social venture. So there are for profit social ventures, we are saying that I am going to address this particular problem, but I am, I am going to make money out of it, that's another. And the third as we have looked at was like this thing called accidental. Sometimes after retirement, necessity, I had a job, now I'm 60. 60 is nothing big these days, right? 60s is, current 60s was old 40s. People are living longer, people are much healthier. Medicine is pretty good. So they have a very healthy life at 60. 60 is hardly the time to retire in the current time and age. So they are high on energy, high on experience, and they can still go for another 10, 12 years before they actually can start off being retired, right? So they can think up of interesting things that they can do as a small venture. So you, actually what people think is entrepreneurs are all young people. But if you go to internet and see some of the successes that came, there are a lot of people who started in the 40s, in the 50s, in the 60s, late 60s as well, that had ended up becoming very successful, very, very successful. It has nothing what to do with success. So when they plotted what time people started their ventures, and, and, and they saw that they're bi models. © All Rights Reserved. This document has been authored by Prof.Suresh Bhagavatula and is permitted for use only within the course "Explorations in Entrepreneurship" delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures, scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying, recording or otherwise – without the prior permission of the author.  Explorations in Entrepreneurship Prof. Suresh Bhagavatula Module 4 There are a lot of young people who started ventures because it's expected, they don't have any encumbrances, they are not married, they just had education, they have high on energy, and they can say that, like bootstrapping, I'll, I'll give two years of my life and see, and see what happens, right? The two years of my life is okay. I can take this risk right now. So there are a lot of people who are young who start. But then what people noticed was there's another bump that starts after 40s. Yeah, I've worked for about 20 years, I don't want to do anymore, like, kids are gone, kids are more or less by 40, kids, if they're 45, kids are grown up and, or at least in their teens. They say, it's okay, I've done, now I want to do something that I always wanted to do. So that's a second bump that people have noticed, right? Right. But there are individuals who start in their 40s and 50s and apparently the most successful time to start is around early to mid 40s, 44 is when a very good time to start because you have like years of experience, you have some connections, you have networks, you have capabilities and you also understand industries and then you have years, at least 20 years, 20, 25 years for you to run your venture. So that's another time that people start, right? So it could be accidental or necessity based that could people start after losing a job. They're not thinking of losing a job. Or after retirement, where they say, I'm like years ago, what do I do? Because most people have had a very productive life from 21 onwards, they've been working, don't know what was happening, they probably would have never taken a holiday, when suddenly have this entire free time, what to do, right? There's only so much that you can watch television, there's only so much that you can go and play, but that could also be a very interesting time to start nonprofits, interesting time to start ventures, right? So, those are the ways in which one could start. If you have any thoughts on this, if you have identified something else, do put in the comments or write about it in our next version, we will talk about it, we will put it in our content, we will give references to you, we will say it was your idea, but do put it in the discussion section. © All Rights Reserved. This document has been authored by Prof.Suresh Bhagavatula and is permitted for use only within the course "Explorations in Entrepreneurship" delivered in the online course format by IIM Bangalore. No part of this document, including any logo, data, illustrations, pictures, scripts, may be reproduced, or stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying, recording or otherwise – without the prior permission of the author.