We have been there and know what not to do!
Whenever one spends weeks and months planning an activity, it takes a toll because of the effort it involves. The Startup Insiders session at T2F on 14th April 2010, on the other hand, was put together in 36 hours. A blog post, Facebook, Twitter and a thread of emails were used to spread the word. Within 24 hours we had 45 registrants for the SI session on ‘Business Models that work’ which was co-organized by P@SHA and TiE Karachi. Usually if 45 people register, you expect to see around 30 which would have been okay with us because we wanted a good interactive group – not necessarily a large one. But imagine our surprise when around 75 people – mostly young and a few seasoned entrepreneurs – walked into T2F 2.0 for the session.
The panelists were an amazing group – Jawwad Ahmed Farid of Alchemy Technologies, Nauman Sheikh of Credit Chex, Adnan Agboatwalla of PixSense, Adnan Haider of Lootmaar.com and Imtiaz Mohammad of Inspire-x. From the get go they wasted no time in singing their own praises and talking about their achievements. They got straight into the business models that they had used at various enterprises which they had started that just hadn’t worked and the lessons they had learnt from those mistakes.
Adnan Haider started off by saying that whereas Imtiaz should be viewed as a new entrant into entrepreneurship, he was exiting and so while others on the panel might tell the participants what to do, he was going to tell them what not to do – because he had learnt it the hard way.
Nauman Sheikh revealed that he had started a company in the US during the dot com bubble when funding was easys to get; it went bust after which he decided to become an intrepreneur. What he suggested to would-be entrepreneurs who didn’t have the money to invest in a venture, was to find a wealthy investor and go for work for him as an employee, ensuring that you were given 5-9% equity in the company and the products you helped it create. He said that is what he had been doing for the past few years. While he helped the investor become even wealthier, Nauman said he was leading a comfortable life.
Adnan Agboatwalla started off by saying that in the almost 5 years of Pixsense’s existence, the business model had changed five times, the last time as recently as last week (well, at least the new business model went live last week), and that is what he was going to focus on in his interaction.
Jawwad Ahmed Farid accepted that he had driven 3 companies into the ground in quick succession and didn’t have a wealthy employer from whom he could take stock options. What he was there to deliver were some lessons he had learnt from the “school of hard knocks”.
So that is how it all began. Some of the pieces of advice given by the panelists:
Adnan Haider said that some of the mistakes they made at Lootmaar was to forget that there were two elements to look at – technology risk and market risk. He thinks that because they were a bunch of geeks, they spent too much on technology development – the auction engine, web 2.0, lots of other cool things but not enough time spent on market adoption. How fast was the market going to adopt the product and use it?
The second major mistake he thinks they made was to consider Lootmaar a part-time exercise. Adnan believes that if you are going into developing a serious venture, you can’t moonlight, you can’t keep your day job and do this. Maybe that is possible in the first month while you are developing your business plan or in the second month while you are developing a prototype but after that you need to give the project your total focus, your heart and soul.
“To me, entrepreneurship is about what excites you, what you want to do, what kind of challenge you want to undertake, what problem you want to solve, to innovate.,” said Nauman. He said that he wants to be an entrepreneur but he doesn’t want to be bogged down with the administrative and operational tasks and if he has to hire people to do that, he would need money – quite a bit of money. “So my take on this is,” said Nauman “find an entrepreneurial home, a 9-5 job where you can continue to innovate.” He has been able to do that at Credit Chex where he has so far been responsible for the development of 8 out of the 9 products they have launched. He was responsible for coming up with the research and innovation for these products all of which now have real customers.
Imtiaz said it takes a bit of insanity to be an entrepreneur. He emphasized that one should only do what one loves to do. He said that for a startup, it is important to keep costs down – be lean and mean. A laptop, a cell phone, home-cooked food for yourself and any friends you may want to persuade to do difficult stuff for you and your home internet connection that someone else pays for is really all you need to begin with, says Imtiaz. Don’t incur expenses you cannot afford at an early stage. Most entrepreneurs start ventures from their homes, their garages or whatever. Imtiaz has no designation on his card. He says he doesn’t want one because he just wants to do the fun stuff which is to think, to strategize, to talk. He wants to get other people to do the difficult things – the coding, the presentations, the operations work.
Adnan Agboatwalla first did a poll determining that the majority of the participants were either students or had been working for less than 3 years. 60% wanted to start companies but when he asked how many of them would quit their day jobs to do that, not one hand went up! So naturally Adnan’s next question was “How come all of you want to become entreprenuers but none of you want to give up your day jobs?” Some said they were still at University, others said they were scared of failing, yet others said they were afraid of the risk, that they either didn’t have enough money, didn’t think they had enough experience or the vision to start a venture, or that their families were against them taking this step.
Adnan explained that the risks differ with age. When you are young, the risk is that you probably don’t have the experience to run a venture and you spend your own money funding your entrepreneurial education whereas if you first get a job, someone is actually paying you to learn. When you are older you have the risk of giving up a well-paid job, putting your family at risk because you have decided to go and try this adventure.
PixSense’s first business model was developed in a coffee shop in Silicon Valley with the founders meeting once every week (because they still had their day jobs) and it took almost 8 months to develop and refine it before the first line of code was ever written. Adnan believes that software can do anything – it is the business model that has to be right for the venture to succeed. Adnan and his co-founders jumped ship and got into full time entrepreneurship only when they had brainstormed several business models with their mentor, the pros, the cons, what was likely to work and what wasn’t. They finally settled on the one they were going to try out and PixSense became a reality.
Jawwad Ahmed Farid spoke about the first company he wanted to start which was an online education site for analysts. He spoke to three professors. The first one asked him how he expected to succeed when someone much more experienced had not been able to write a book on the subject. The second one told him that there was only one way to find out – give it a shot! Now that he had a tie, he asked the third professor who said that although Jawwad was an unknown quantity and it was difficult to see why analysts at Merrill Lynch, Goldman Sacs etc would pay any attention to whatever he came up with, he agreed with the first professor that the only way to find out was to give it a shot. And Jawwad did. Little did he know that the dot com burst was around the corner and that a much larger player with existing contacts in the finance industry and capital markets already had the same idea.
(Yes yes there’s more and there will be videos – gimme a chance guys!) 🙂
Entry filed under: Posts. Tags: Adnan Agboatwalla, Adnan Haider, Business Models, Entrepreneurship, Imtiaz Mohammad, Innovation, Jawwad Ahmed Farid, Jehan Ara, Nauman Shaikh, P@SHA, Pakistan, Startup Culture, Startup Insiders.