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@ksrikrishna

http://ksrikrishna.com/

Selling stuff

people are

prepared to

pay for

Usually involves

people and laying

a foundation

Building

Should you stay?

● In my fourth startup (2nd as founder)

● busy making mistakes every day

● Sunk/shutdown at least one business

● with over 1.5M investment while at Sasken

● Worked as #2 guy in at least two startups

● before quitting in frustration

● Built a $50M business within a 600M company

● the product marketing manager

● Build one business with $20K cap., $0.5M angel

● Sold the business at $9M

Product is butYour product

is

only

a piece of it

People Your people

are a

bigger part

of it

The Journey (3/3)the process

& journey

are the most

important

part of it

Flickr joiseyshowaa

Basic Business Cycle

● <assumption>

● [Customers are out there]

– [They have an unfulfilled need]

● [Your product &| service addresses it]– [They are prepared to pay for it]

● [You can access them/they can reach you]

– [What they pay you is more than what it costs you]

● [You make a profit]● </assumption>

● [Repeat cycle]

Reality Check (1/2)

● What's the ratio of

● engineers:sales:others?

● What's the R&D expenses

● as % of sales?

Reality Check (2/2)

● What does their P&L look like?

● Revenue

– Cost of Goods

● Gross Margin

– Operational Costs

– R&D expenses

– Marketing expenses

– Admin (SGA) expenses

● EBDITA (PBIT)

Startup Reality

● Average US startup took nearly 8 years (yep eight)

● to get to $50M revenue

– Microsoft took 8 years & Oracle took 10

● We took four years to get to our 1st million dollar year

India Funding Reality

● Angels

● ex-entrepreneurs, HNI, non-blood relatives

– Usually betting on the person (you)

– Finite money and finite help to step up or scale

● Family & (soon to be ex-)Friends

● Where much of the action is to get rolling

● Bootstrapped

● Customer foots the bills

India Funding Reality

● VC are businesses too (duh!)

● Ideally (un)reasonable risks for unreasonable returns

● Eco-system is far from ready

● We should quit all this Silicon Valley of India talk

● Entrepreneurs are far from ready

● We have the spirit (motivation) but the flesh (skills) is weak

● Most of us are unfundable

● Doesn't mean we won't get funded!

Your Motivations

● Why are you doing this?

● What constitutes success?

● Is that what your partners think?

● How long are you prepared to go at it?

● Why or why not?

Our story – the beginning

● Want to build a tech product company

● Out of India – maybe in DSP area? EDA? wireless?

● Pitched 13 different concepts to customers

● Over a six month period

● Mostly B2B concepts – ranged from

– deeply tech (chip design, DSP software) to

– enterprise apps (sales automation)

● All but one founder held day jobs

– Got first 15K service contract, hired one programmer & bought computer

● Operated out of founder's apartment

– Lost one founder in year 1 (culture)

Year 1-4

● Finally picked Bluetooth over Wireless (this was '99)

● Because latter required 10K payment for group membership

● First 3 clients (350K, 250K, 200K) landed with Powerpoint

– Leveraged relationships and hustled like crazy

● Screwed around nearly 2 years to deliver product(s)

– Lost first 3 customers :-) and brought in more (Japanese) customers

● Tech market imploded in 2000

● Bluetooth declared (nearly) dead at least twice 2002/3

● Broke even in year 4 and realized we are a business

Year 1-4 Behind the scenes

● Brought on chairman who knew banks

● Arranged for 250K line of (packing) credit

● Borrowed 350K between angels & family – interest bearing

● Hired (& fired) sales guys in NA & Japan

● Put our own guys in NA & Japan

● Shut down VLSI initiative & outplaced people

● Shutdown 1 (profitable) service client

● Made the transition from software to system company

● Employee 18-34 turned out to be wrong fit

Year 5 - Focus

● Focused on stereo music over Bluetooth

● Transitioned Japan service business to 3rd party

● OEM focus in North America & Europe

● Silicon vendor partnerships/licenses for royalty rev stream

● Reference design as a means to sell software

● Major account strategy

● What is our growth strategy?

Year 6 & 7

● Competitors get snapped up in marketplace

● We develop Plan B to enter retail stereo headsets

● Hippo LifeStyles Pvt Ltd. Singapore

● Customer express anxiety about us being acquired

● But unwilling to acquire us themselves

● We hire an investment banker from the Valley

● They run a good process with 4 final bidders for Impulsesoft

● We opt to get acquired by SiRF as we deem best fit

● We were partly wrong – for cultural reasons

My $0.02 here

● Focus on building revenue (model)

● Paying customers are always good

● Refine, tweak and re-do as needed

● Customers & revenue will keep you honest

● You'll have better funding options, hopefully

Takeaways

● Product is only part of your business

● People are the major component of your business

● Better enjoy the journey

● Belt up it's a roller coaster