Wooing a Smart Employee?

Trap the Ocean in your Puddle.

Wooing a smart employee away from a large company to join your startup can be tough, challenging but rewarding. This is how you should go about it.

In the early 80s, Steve Jobs asked John Sculley, the then president of PepsiCo, whether he wanted to continue selling sugared water all his life or change the world. Jobs was looking for a man to run his little computer company. He saw a man with the skill set needed to market his dream and he went all out to get him bite the Apple. All big companies are full of people who are firmly ensconced in fancy positions but are thirsty for a bigger challenge. The extreme comfort at the top of the corporate ladder can sometimes be suffocating to entrepreneurial people. They are looking for one chance, one compelling argument and one opportunity to create something from the ground up and they’ll quit their jobs.

On the other side, is the startup business that has a wonderful idea that is beginning to work. Now is the time to scale up and manage growth. It needs top-notch managers who will own the company’s fate and show enough dedication to stay with it irrespective of the modest initial benefits.

Put the two together and a success story unveils itself. But a startup has to be careful not to bite what it can’t chew. Done carefully, the hiring can be rewarding to both sides. The very first precaution, of course, is not to choose the wrong guy. An unfit candidate who can’t adjust to a startup environment can actually prove downright fatal for the small company. A venture capitalist, who did not wish to be named, drew from his experience and said, “We once hired a highly qualified and extremely focused CIO for one of our companies. In fact, he was so focused that he was a bad team player. He would end up working alone a lot. A lot of people started quitting because they just couldn’t work in that environment. And they would tell us, during the exit interview, very candidly that it was the CIO’s fault. So not only do you have a senior person who is not performing, but you also have performers who stop performing.”

Sanjay Anandaram, a founding member of Jumpstartup and adjunct professor at INSEAD, Singapore, points out that there are certain attributes needed for any position — team spirit, integrity and relevant skill sets. However, a small company identifying a candidate in a large company must check if the person has the self-confidence to give up the comforts of the large organisation. S/he also must cherish the operational freedom the small organisation allows and s/he has to be able to make do with less as the smaller organisation will have a lot less resources at their disposal.

A person who recently made the move from handling a large-scale operation to a company with revenues a tenth its size, is Manoj Dawane, the current CEO of Mauj. Until earlier this year, he was handling Bharti‘s telecom operations in western Uttar Pradesh and Uttaranchal. In that region, over 2,000 people reported to him in some way or the other, while in Mauj, the number tightens to a mere 150. He says, “The biggest comfort that you leave behind in a large well-oiled company is the systems that are in place. Here the systems need to be created.” The comforts of the club privileges that his former employer provided were also left behind.

He says he gave these up for a fresh dose of adrenaline that can come only from growing a small company. He got his first fix of this earlier this decade when he ran a company called Net Decisions. He adds, “Even if it is a general managerial role with a large breadth of operations, in a large organisation you are put into a matrix-like structure.” He says that with a company like this, he gets to run a business end-to-end.

Given that the smaller company would have far fewer people than the previous employer, the candidate needs to ready take on jobs that one performed at the beginning of the career. As s/he grew within the organisation, s/he will have to take on work that got delegated to juniors. “It is important that the candidate fits into the ‘execution’ mindset as opposed to the ‘managerial’ mindset. They now have to take on a contributor role more than the managerial role,” says Manik Arora, managing director of IDG Ventures India.

This means that the candidate needs to be ready to work the 15 hours a day that they did when they started out, as that is the attention a start-up needs. Considering the high stress-levels of the start-up, very few who have crossed age 40 take it up. VCs and entrepreneurs say that the ideal age for a potential core team member is from their late 20s to their mid 30s. “Sometimes we do hire people with over 20 years of work experience. In this case we need to see if they are okay with reporting to a CEO who is younger than them,” says Alok Mittal, managing director of Canaan Partners. In the 40s, the average Indian usually has a family to tend to and is coasting in their careers. There is a need for stability at this point of their lives.

“Sometimes we find a senior person who has nothing to lose as they are in a secure place,” says Rahul Khanna of Clearstone Ventures, adding, “This person is in such a high position that they simply have to oversee the operations. They are not really doing much. These people want to make a difference. For instance, the rush of going from 0 to 40 million users of a cellular operator is high. The rush of taking it from 50 million to 100 million is far less. There are people that you can tip over, but they need to be near that tipping point themselves. It is difficult to approach a person who is in the thick of a battle and woo them out of that.”

People who have always been steeped in a large organisation as an employee are highly unlikely to leave their current set up for a start-up. These sort of people are also lower down on the preference list of VCs and headhunters. “In my experience, we look for people who have worked in large as well as small companies. It is preferred if they have been part of a start-up before. If they’ve come from a large company it needn’t have been a start-up, but they should have been part of growing the company significantly,” says Mr Mittal.

Increasingly venture capitalists want to see the potential candidates show their belief in the venture. “One way to test if a person is in line with the vision of the company is to give them equity and have them settle for a lower salary. It is a signal that the person is interested with the long-term success of the company,” says Mr Arora. When a candidate is willing to do this, it is almost a sure shot that he believes his role growing the company, can pay him back greater than a salary could afford.

Mr Khanna says: “The DNA we are looking for is someone who understands the trade-off between cash and a stake.” These sort of people see money as a derivative of their work, and not the other way around says Mr Anandaram.

Seeking out these sort of people can be done through referrals, head hunters, or through ones own phone book. Mr Khanna cautions that many times startups move so fast that “people hastily pull people out of their network of contacts. That’s one way of going about it. The other way, which I feel is the better option, is to write out a detailed job description and look for the person accordingly.” The ideal option is to get someone who has worked with the current team before.

Article Resource:

Jacob Cherian is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

Unleash the innovator within

Unleash the innovator within

Five key ways to unleash the hidden potential for innovative thinking in your business and achieve high levels of success:

THINK TWO GENERATIONS AHEAD

Envision your company 50 or even 100 years from now, even if you don’t foresee your product or service lasting that long. Such forward-looking reflection creates an umbrella for long-term innovation to occur. Working back from your 50-or 100-year vision plan in 10-year increments, ask and answer the critical “who, what, where, when, why and how” questions about your business. For instance, who will your target demographic be; what will your core products and business focus be; where will your office(s) and facilities be located ; when will key business milestones be achieved, why will your business matter 10, 15 or 50 years from now and how are you going to achieve your business goals.

CONFRONT & PARTNER WITH THE UNCONSCIOUS

Experts suggest that of all the experiences, knowledge and data stored in our minds, we are only “conscious” of and actively use just 10% of it. The other 90% resides in our “unconscious” — it’s this part of our mind we can tap into for valuable insights daily. For the next 21 days, write one paragraph about some aspect of your leadership process that you want to improve. The more you write about a problem, the more you’ll tap your unconscious for innovative ideas about solving it.

AIM TO INCREASE ENERGY, NOT JUST EFFICIENCY

Do a quick energy audit of your employees to understand what energises them and fuels their personal growth. If you understand what energises them, you’ll be able to implement actions that motivate your employees and increase productivity. Ask every employee to identify the three things that energise him or her the most about their jobs. Also ask them to identify the things they’re not currently doing that would energise them. Then match your employees to the energising activities that best fit their talents and skills and needs. Also ask your staff to identify the three things that steal their energy. Help your management team reduce the activities that de-energise the workplace.

ESTABLISH THE FREEDOM TO INNOVATE

Creativity drives change. So tap into your employees’ intuitive side by ritualising “ingenuity time” on the job. Utilising creative techniques can often help people see issues more clearly. Set aside enough money for your team to compete for an industry-related contest. It will keep your top people on their toes. Encourage people to draw a diagram or depiction of their business problem or challenge in the form of a character or situation. Then ask that they sketch the conclusion they envision that would resolve the matter. Seeing their problem put to life often helps people envision the best solution.

START TAKING RESPONSIBILITY

Any problem you’re directly involved and which you wish to solve requires reflection on your role and responsibility related to that problem. While you may not be the primary cause of the problem, reflecting on your role will help you better understand and acknowledge how you may have contributed to it. When you have a problem employee, start the fix by asking yourself: “What changes do I have to make in myself to help this person perform better?” You may not always identify something that needs changing, but the mere matter of asking and spending some time on reflecting will make you a better leader.

Reference:
(Adapted from http://www.entrepreneur.com/ )

It Pays Rich Dividends To Stay Ethical.

It Pays Rich Dividends To STAY ETHICAL

It May Be Painful In The Short Term, But A Strong Ethical Code Is What Builds Lasting Value For A Start-Up.

“It is better to lose a billion dollars than a good night’s sleep.” NR Narayana Murthy

IT TOOK place nearly a decade ago, but is still fresh in the mind of R Satya Narayanan, founder of Career Launcher. Officials from the income-tax department were scrutinising the account books of his online education services firm, when an officer suggested he planned to disallow some expenses and impose tax on them. Mr Narayanan argued the expenses deserved to be tax-free, but the officer didn’t agree. After much haggling, the officer suggested he could allow the expenses if a certain sum was paid to him. It was the entrepreneur’s moment of truth. He had to decide whether to pay the bribe and get rid of the headache, or refuse and face the consequences.

“It is one thing to talk about ethics, but quite another to deal with it when you come face-to-face with such a situation,” recalls Mr Narayanan, whose fledgling firm was then still trying to find its feet on a modest revenue of Rs 4 crore. His company needed to move fast, and focus on growth. It simply could not afford to lose valuable time and energy on income tax procedures and litigation. The tax official must have reckoned he had the firm cornered and Mr Narayanan would simply pay up.

But Mr Narayanan disappointed the official. “I said I want to build the company on certain values. So, I told him you are not the final authority. We will appeal and see, but we won’t pay,” says Mr Narayanan. The officer disallowed the expenses and slapped a tax demand, but Career Launcher accepted the challenge. It won an 18-month long legal battle and got the decision reversed. Mr Narayanan believes the incident sent a strong message to everybody concerned: The taxmen knew this company can’t be bullied and the employees knew that there was no place for unethical practices here. Today, Career Launcher has an annual revenue of Rs 70 crore, operates from 130 locations and serves 50,000 students each year. Honesty has not dragged down the company’s growth, but has reinforced it.

The biggest question before most start-up entrepreneurs in India is how to tackle corruption in the government and a propensity for unethical behaviour among, at least, a section of employees, vendors, customers, competitors and everybody else. Unfortunately, many business leaders choose the easier answer. They factor in some amount of cheating at all levels and start playing by the system. They vigorously take part in cutting corners — be it in taxes, product quality, paying out liabilities or in their treatment of employees. They bribe their way through. They cheat to avoid being cheated. In the short term, these practices save money and thus look attractive. With everybody else also in the game, it becomes easy to justify one’s poor conduct by blaming it on the society.

In the long term, however, this race to the bottom hits back with a cancerous force. Employees figure out that the boss has lost the moral high-ground and start imitating the entrepreneur in their own dealings with the company. It may start as an inflated expense bill or a quickly stolen long-distance call, but the cheating spreads in scope and reach. Customers, government officials, shareholders and all other stakeholders imbibe the poisonous spirit and resort to I-Squeal-Before-You-Do game. Exploitation becomes the norm and the company self-destructs. Some victims end in the start-up stage, while others hold on longer and go bust only after they become Enrons or Arthur Andersons. But fail they do.

“It may be the tougher path, the road less travelled, but good ethics is an important element for long-term survival,” says Satish Doshi, founder-chairman of Executive Recruiters Association, and a fellow of the Computer Society of India. “What it means to an organisation is that you don’t need to look from behind the shoulders of people to see if there are any vested interests at play. Ethics build a trust-based environment.”

To build this ecosystem within one’s company, an entrepreneur must start by formally writing down a code of conduct for all employees and be the first to start practising it, say experts. Such a code of conduct must be fully aligned with the personal value system of the entrepreneur and it helps if one is honest to start with. “It is painful to see entrepreneurs say they are in business to make money. I tell them, first define what is money,” says MS Pillai, founder of Sadhana Centre for Management and Leadership Development, and a member of The Indus Entrepreneurs. “Is it just the currency notes or is it the wealth of goodwill and respect you build for your company?”

Mr Pillai says an entrepreneur must check if he or she has the “inner stamina” to sustain an ethical business and if not, should stay out of business. Great companies have built this strength among their entire workforce and do not tolerate any violation. Mr Pillai cited the example of a fast-moving consumer goods company, one of the largest in India, which sacked a general manager for accepting a forbidden Diwali gift. A reputed vehicle maker sacked two top performers for touching women colleagues in an indecent way at a cocktail party. Both these decisions came less than 24 hours of the violations. “The message to the employees was loud and clear. There will be no compromise if certain things take place,” recalls Mr Pillai.

Just like financial, marketing or production plans are written down, a company needs to write down its ethical policy too, say business mentors. This will communicate the code of conduct across the organisation, offer an objective frame of reference and stipulate proper responses for specific situations that arise. For this reason, a code of conduct is a highly customised document for each company, reflecting its own peculiar needs.

The right time for a start-up to institute of a code of conduct is before the first employee is hired, say human resource veterans. It may be easy for an owner to hire like-minded people when the company is small, but the personalised approach won’t work once staffing reaches double-digits. Thus, a strong human resource head must be employed as the company’s gatekeeper to avoid bringing in dissonant attitudes in the first place. Wipro is a good example of a company that follows this approach. It puts candidates through a test of honesty by verifying their testimonials. It not only denies employment to those who had forged documents, but also hands them over to the police. Nowadays, candidates with less than proper documents fear walking into Wipro’s campus.

Mr Doshi says a successful code of conduct starts with a top-down approach. It all starts with the actions of the entrepreneur. The set of all choices that the leader makes, eventually becomes the code and culture of the company. However, it should not stay top-down for ever. There should also be a feedback system that lets employees shape the nuances of the code and take the firm’s objectives further. “The code has to evolve but you won’t evolve it all the time. We at Career Launcher evolved our code until we were 40 people. When we arrived at that number we got down to broadcasting and implementing it. Of course, we are alive to feedback that will make the code better suited to our company,” says Mr Narayanan. The ethical code is a generic guide based on values and principles, but a code of conduct is the specific dos and don’ts of corporate behaviour. So, it helps to start by defining the business’ value system and then get down to finding answers for specific situations that may arise. Mr Pillai defines business ethics as management by truth, transparency, partnership and collaboration. Mr Narayanan says the value system of his firm is founded on five pillars: risk-taking, openness, ownership, honesty and commitment, and innovation.

The biggest danger for a start-up, or for any company for that matter, is to have a code of conduct, but not implement it vigorously. There are many companies that have one set of rules on paper and another set of rules in practice. Again, this deception may prove profitable in the short term but over time, all those coming into contact with the firm will realise its true worth and pay it back in its own coin. As big companies realised that markets reward companies seen as ethical, they have unleashed a marketing propaganda to manage their image along ethical lines, without changing their core business practices. The fashionable concept of Corporate Social Responsibility, or CSR, as spin doctors call it, comes in handy. What started as a theme for good corporate behaviour that must start with reforming core business processes, has now become the buzzword for donations, tree-planting, sponsorships and other trivial exercises. Genuine CSR must begin by making benign products and selling them ethically. Hence, a code of conduct is not merely a smart marketing tool, but a deeper value that guarantees all stakeholders a predictable, fair and uncompromising behaviour pattern. The reward for the entrepreneur is a good night’s sleep.

Article Resource:
Author: Srinivasan S. is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

The Google of Mobiles

WILL COME FROM INDIA

Over the past decade, Google has been every entrepreneur’s benchmark for success through innovation. Besides its founding duo, Sergei Brin and Larry Page, there were a handful who saw the internet search engine’s potential and backed it when it was still being run from a garage. And here’s the Indian connection. Ram Shriram, who went to school in Chennai and later migrated to the Silicon Valley, was one of the pillars that built Google. Ram Shriram considers himself a guide for entrepreneurs rather than a mere cheque-writing angel investor. Known as the ‘Sherpa from Palo Alto’, he runs Sherpalo Ventures and also serves as the founder director at Google Inc.

Fundamentally two biggest applications on the internet are search and email. And there was a quantum order of magnitude improvement in quality of search at that time that Google presented that resonated with me and resonated with its early users. That is what prompted my interest in it. Agreed that we did not have a business model or a revenue model figured out at that point but you have to start somewhere small for you to grow later. And if u do that piece really really well then you may have a future as big as Google.

So was it their luck that they found an investor like you?

No, I would not call it luck. Not for me not for them. In my case, I do not think lightening strikes three times as it did for me. I had done Netscape and Amazon before I did Google. And then there have been more successes like Stumbleupon and mint which is a financial services portal aggregating personal financial information. Google is the most prominent one in my portfolio but it certainly was not just luck.

You have seen Google grow like no other dotcom in the internet space. Do you see another Google, may be, in India as entrepreneurship is on a high here?

Frankly speaking. No. Not in the internet space at least. The challenge in India to create another Google is not that somebody can not build a big internet company, I mean look at Naukri, it is a pure-play dotcom company. The market is limited by the size of the internet population which is somewhere between 30 and 40 million and unfortunately it is staying somewhat stuck at that level because we have a last mile problem. We don’t have an Digital Millennium Copyright Act equivalent law or a spectrum policy that opens up broadband spectrum. I have had conversations with the policy makers and unfortunately the pace at which it is moving is slower than I like. It is important for Indian dotcom space as the trickle down economics of having more Internet access is that it could generate more jobs, generate a great deal more new companies that can be bigger companies than Google. It not that the entreprenuership spirit is low so India is not getting a Google out, they can do it. Wipro and Infosys have shown that there can big companies build around outsourcing so Indian entrepreneurs can easily do it on the Internet.

Ok. So, what you are saying is if America’s Google was in the Internet space, India’s could be in some other?

Yes. Looking at the amount of innovation happening in India. I think there is a Google waiting to happen in the mobile space. I see somebody like Google coming about every 10 years. In the 80s it was Microsoft, in the 90s it was Cisco and Google in the period up to 2010 and there may be a garage start-up right now in some part of India in the mobile space that would set the tone for the coming decade. Lots of interesting content companies coming about as there are confluence of cellphones and entertainment content. The big success will happen on mobile and it would happen on mobile because the mobile market is growing by 8-10 million users a month and most importantly almost all users are attuned to the use of the technology on offer when you say mobile like it is with Internet in countries like the US.

But is there enough spark then in the Indian space for bigger companies to come out?

Absolutely. There is spark. We are in the age of entreprenuership in India. There are good market spaces to nurture businesses. But the Internet user base has to go up from 30 million to 100 million for any dotcom company to scale up like Google or may be also an Yahoo.

If any entrepreneur has to take lessons from Google, what would those be?

It’s not just about having a good idea and a vision. But it’s more about great execution as successes come with great execution. So what does great execution mean? Hiring great people, building right partnerships and more importantly than doing the right things success for a start-up, it is in figuring out the things not to do. This keeps you focused and finally making sure that you make the right choices in terms of capital i.e. making sure the right kind of people invest in you..

If you look at the dotcom players in India, there are a lot of ‘Me Too’s. For every Yaari.com , you have a Facebook. Comment.

I don’t think that you can make the characterisation that they are all ‘me too’s in the Indian market. What happens is that there are only so many market segments in the dotcom space, so you can only build companies in the market segments available to you. When you talk about segments like search, emails, social networking, since there are global giants like Google, Yahoo and Facebook. So the chances for scaling your own ‘me too’ here are far and few. But if you take something like jobs or travel, those are areas that need to be targeted more. Yes there is an Expedia for a Cleartrip, but those are not successful in India because they have not focused on India as a market. So just because a company exists in that space does not mean that you cannot build a success in the same space. Look at China, it has a company in each of these spaces where US dotcoms are dominant. There is 51jobs.com, then there is qqq for messaging. That proves that there can be a successes where the US already has a success. Having said this, there are growth areas like these but these areas have been invested in quite heavily. There are 6-8 companies invested in the same sector and there are all not going to be successes. I think there will be a shake out in terms of successes from the next set of venture backed companies. Nobody in India starting a web venture would die for lack of funding. There is a good angel network here as well. The law of averages however would now start to apply in the dotcom industry and only a small number would actually succeed. But this phase is still 2 years away.

A lot has been said these days about the US slowdown. Do you think the US recession affect the Indian start-ups?

I think the recession will affect the tech spendings. It hasn’t yet affected any start-ups and it won’t affect the start ups because unlike the 1999-2000 period it wasn’t the tech bubble that has caused the decline in the markets but a set of financial issues. Recessions are when great companies are built. If you look way back at Microsoft, Google, these were companies that were essentially born at the depths of the downturn because that is a great time to hire people and it is a time when valuations come back down to normal levels. It is, however, affecting the private equity companies and in turn the fund flow to Indian companies.

Article Resource:
Author: Ritwik Dhonde is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

Money Matters

Making the Right Pitch for Capital

Many financing efforts fail because of avoidable mistakes that are made in pitching potential lenders, structuring the agreement or managing the money once the deal is done.

HALF-BAKED BUSINESS PLANS

There’s nothing worse than going into a money meeting unprepared. If you haven’t put the time and energy into writing a full-blown business plan complete with elements, such as a cogent description, financial projections and a competitive market analysis, the people with the cash won’t put the time into evaluating your proposal.

FOCUSING TOO MUCH ON THE IDEA AND TOO LITTLE ON THE MANAGEMENT

It’s not enough to convince potential backers that you’ve invented the next must-have gadget or can’t-miss clothing store concept. You also need a team that can generate the revenues to repay a bank loan or provide an exit strategy for a VC or angel investor. Many business novices ignore the second part of the equation; that can doom their money quest.

Remember, the greatest racehorse in the world still needs a great jockey to a win the race. The same principle applies in business. Showing that you have recruited a top-notch salesperson, a skilled marketer, an accountant with start-up experience, other key personnel, and even outside experts like an attorney or business coach who can supply professional guidance is essential to finding a funding source.

NOT ASKING FOR ENOUGH MONEY

Starting out with too little money is one of the causes for start-up collapses. That’s often because entrepreneurs, who are wet behind the ears, don’t realise that they should calculate their borrowing needs based on their worst-case scenario instead of their best-case forecast. An old accounting axiom says that everything will take twice as long and cost twice as much as you expect. While that may be an exaggeration, new business owners are frequently too optimistic about how soon they will begin to fill their cash pipeline and how fast the money will flow. If you’re underfunded, you won’t have a cushion to tide over in the event of slow initial sales.

HAVING TOO MANY LENDERS OR INVESTORS

One of the hazards of securing financing from multiple sources is managing too many relationships and expectations. It takes time away from your core business. These not-so-silent partners may have conflicting interests or demands and the consequences can be devastating.

FAILING TO GET ALL THE PROPER LEGAL AGREEMENTS

This is arguably more important than a prenuptial agreement for a couple with significant individual assets. Every lender or investor eventually will need his money back, and a legal document covering everything from the terms to the timing can avoid the kind of acrimony just described.

POOR CASH FLOW MANAGEMENT

Too many new business owners burn through their seed money too quickly and fail to reach cash flow-positive status in a timely manner. Some causal factors, like late product deliveries and economic downturns may be beyond one’s control, but the executive team is clearly at fault for others, such as unnecessary spending and overly optimistic expense/income forecasts. Financial sponsors don’t take kindly to that sort of mismanagement. And if they turn off the tap, all your hard work may go down the drain.

Reference:
(Adapted from entrepreneur.com)

Brand building’s key to LONG-TERM SUCCESS

Becoming An Entrepreneur Is Nice, But Building A Brand Is Quite Special.

How Early Should Start-Ups Seek To Build Brands.

BRAND building started on day one for Riyaaz Amlani’s new venture six years ago. His Mocha coffee shop chain wanted to differentiate itself from others, which Amlani thought had followed the Starbucks template faithfully. He spent several weeks planning nuances such as the quantity of the dessert scoop and the mix ‘n’ match of furniture. He designed the whole project with a belief that a coffee shop is not a restaurant, but a place for socialising. All this got early visitors talking about how different the experience was. And Mocha had got its brand baptism.

On the other hand, Internet portal Sulekha.com didn’t begin a brand-building exercise until this year, though it had started as early as 2001. The company focused on developing a critical mass of users and let growth come from word-of-mouth. Unlike the flashy dotcoms that rose and fell during the bubble, Sulekha conserved cash for operations.

Start-up companies often grapple with the dilemma — whether to build a brand or not? While a strong brand equity can bring enormous value to the company, it also requires a large commitment of capital and management energy early on. Many businessmen wonder if they aren’t too small to attempt brand building or whether they can afford it.

Experts say new businesses should start planning for brand building as early as possible. For some, it might start at the pre-product stage, while some others would have to wait till they establish the core attributes of their product or service offerings. But, failure to build a brand and to start investing in it at the right time can bleed the company of much of its potential, experts say.

“A company should start building its brand, stagewise, as soon as it has validated its core,” says Harshal Shah of Reliance Technology Ventures. He says this ‘core’ comprises the team’s values, experiences and capabilities. For instance, when Steve Jobs started Apple in the mid-1970s, the computer industry was dominated by stuffed shirt veterans dealing in complex mainframes. Those who saw Jobs roaming about his office barefoot and in frayed jeans would have suspected he was going to convert the mighty computer into a gadget for everyone. And that’s exactly what he did. Today, the Apple brand enjoys a cult following as it stands for innovation and fun.

A strong brand is a profitable asset. People pay far beyond the manufacturing costs and nominal profit margins for products they recognise, trust and enjoy consuming. For an early stage company, it helps in defining the product to both potential customers and its own employees. It tells buyers that this company is investing for the long term, it will be around tomorrow and it will repeat the performance. Internally, it tells the team members that the entrepreneur stands for certain values which must be reflected in every action that they undertake.

Products without a clear brand definition eventually lose their direction, recognition and value. They will turn into commodities that will be bought from the cheapest vendor without a quality promise.

The identity of a brand flows from the organisational culture, experts say. It is the essence of the attributes of the offering, that will be consistently performed every time a customer experiences it. It is not mere advertising, nor even just marketing, but a clear recall in the consumer’s mind of all that a product or a service stands for. “Any moron can put an ad in the paper. Communication is the easy part. The process of communicating and then delivering on a promise builds the brand,” says Sanjay Anandaram of Jumpstartfund, who is also a visiting faculty at INSEAD.

But when does the core get validated? Shah says it typically is about a month from the starting day, but can vary depending upon the resources available and the opportunity at hand. For travel portal Yatra.com, which started selling to consumers before tapping business customers, the validation happened even before it started, he says. “When Yatra came to us for funding, we looked at a lot of other companies to understand the space. We found that these other companies didn’t have experience in the travel business. (But Yatra’s founders) came out of the travel industry and therefore had the domain experience and customer knowledge.”

With some companies, the first big customer win can propel a company into the branded league. Further customer wins become easier as a satisfied first buyer will provide the testimony. For WiMAX equipment supplier Telsima, such an opportunity came in the form of Reliance Communications. Shah says Telsima experienced its Big Bang moment with such a top name becoming its customer and there has no looking back since then.

The key to brand building is promising exactly what the business can deliver and delivering exactly what it has promised. Every time. From employee behaviour in front of customers to the words chosen for advertisement copy, every interaction that a company undertakes with the target audience defines, embellishes or destroys the brand. “Every interaction also gives an indicator. If a company promises to deliver on the next day and if they don’t, it is an immediate indicator,” says Baazee.com founder Avnish Bajaj, who has now turned a venture capitalist with Matrix Partners.

So, it is a good idea for a start-up to make sure that its product works well and is ready for brand-building. “You do not want to start brand building and then if your product doesn’t work, you will lose your customer and s/he won’t come back,” Praveen Gandhi of Seedfund cautions.

Once an early-stage company decides to invest in brand-building, the first step would be to define its own genome and go about imprinting it on its products. R Ramaraj, who steered Internet company Sify in the early days of access business, says: “Our core was to encourage an innovative environment.” Having taken this decision, the company went about encouraging that culture within the organisation. “After all, we were one of the first Internet companies. We had to be innovative as there weren’t enough role models.“ Today, Sify is not only a large access company, but a complete content and telecom services provider.

In Santa Cruz, a Mumbai suburb, sits a little company that has no fixed work timings. People play computer games when they want to and the company gives an X-box 360 to their most successful business partners. During their quarterly off-site gatherings, they spend half the day playing football and basketball. This is a gaming company and their theme is “Play together”. Quentin Staes Polet, co-founder and CEO of Kreeda Games, says ‘playing’ is part of Kreeda’s core and the brand values flow from it.

Quite often, entrepreneurs fail to recognise such intrinsic values that will help a company win against competition and provide a lasting value to customers. “The lack of value creation is because people don’t know what to focus on,” brand consultant Ramesh Jude Thomas says. In other words, value creation is the eventual goal. Those who don’t see this and claim to focus just on growth are wasting their time.
The next step, of course, is to ‘live’ the values that a newborn brand claims to represent and communicate to the audience that the same results can be expected in all the transactions. Promod Haque of Norwest Venture Partners gives an example: “One of our portfolio companies based in San Antonio is called Rack Space. They provide web hosting services. The management of this company calls their customer support “fanatical support”. Here, the brand of the company and the company culture are intertwined. It is drilled into their employees that they will provide fanatical support.”

Infosys Technologies, the oft-cited example for entrepreneurship, enjoys arguably the best brand name among Indian software services providers. One of the chief attributes of its brand was its ability to bridge the cultural gap between the East and West. Early on, it focused on training its employees to understand the finer points of Western culture and conduct themselves accordingly while working on customers’ sites. This, eventually, has got it better billing rates than other Indian companies.

Longevity and profits in the long term are a good reason for early brand building.

Article Resource:
Author: Jacob Cherian is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

Now this is What I call Innovation!!!

Brand Logos

I am not sure how many of you have noticed a hidden symbol in the Federal Express logo:

Yeah, I am talking about the 'arrow' that you can see between the E and the x in this logo. The arrow was introduced to underscore speed and precision, which are part of the positioning of the company.

The SUN Microsystems logo is a wonderful example of symmetry and order. It was a brilliant observation that the letters u and n while arranged adjacent to each other look a lot like the letter S in a perpendicular direction. Spectacular.

The above logo is for an editing studio. I like the way the logo attempts to convey what they do.

The above are two magazines from the Readers Digest stable. Again, the attempt to communicate what it is about quite figuratively through the logo catches my attention.

I liked this logo of a hair stylist for the cheeky humour it brings to the (dressing) table.

This was a logo created for a puzzle game called Cluenatic. This game involves unravelling four clues. The logo has the letters C, L, U and E arranged as a maze. and from a distance, the logo looks like a key.

This logo is too good. For the name Eight, they have used a font in which each letter is a minor adaptation of the number 8.

Eighty-20 is a small consulting company which does sophisticated financial modeling, as well as some solid database work. All their work is highly quantitative and relies on some serious computational power, and the logo is meant to convey it.

People first guess that 20% of the squares are darkened, but that turns out to be false after counting them. The trick is to view the dark squares as 1's and the light squares as 0's. Then the top line reads 1010000 and the bottom line reads 0010100, which represent 80 and 20 in binary. Eighty-20 is a small consulting company which does sophisticated financial modeling, as well as some solid database work. All their work is highly quantitative and relies on some serious computational power, and the logo is meant to convey it.

Kinda like the surreal green screen of The Matrix, they want us to read stuff in binary.

This was a logo designed in-house for some internal event at IBM. I like that they are quite relaxed about the logo, unlike certain other companies who do not like the logo to be tampered with in any way even for internal promotions.

You might think the arrow does nothing here. But it says that amazon.com has everything from a to z and it also represents the smile brought to the customer's face. Wow, that is quite deep.