Overview of India Startup Landscape – 2014
When Wishberg got TechCrunch’ed and had its share of Global PR two months back, many people asked how did we manage to do that! I am not answering that here.
Getting featured on top technology sites “should not be considered success”, there are miles to go for us. If you are building a Global Product, getting tech coverage from around the World helps you get the word out for your product.
So below is the cheat sheet we built for this – its the list of the top technology sites & blogs you should consider.
Of course I have contacts of all these websites and reporters. Not sharing as I don’t want them to get spammed! If you still want them, send $10,000
If I missed any, please tweet them to me on @beingpractical or email to pj (at) beingpractical.com
GOSF – What is not right about it!
The Great Google Online Shopping Festival (GOSF) is all over my timeline. To be honest, I also had my share of fun.
#GOSF – 500 Internal Server Error. Someone at the IRCTC office must be laughing right now.
— PJ (@BeingPractical) December 10, 2013
What went wrong with GOSF:
1. GOSF was down.
The Official Site was down – gosf.in. That is ok, but just that we didn’t (No one did) expect this from Google. .
2. Everyone Got Invited to the Party.
Over 225+ partners were listed on GOSF.in. It looked like a directory of ecommerce sites. It should have been exclusive, invite only and curated.
SaaS startups, if you have something to sell to Ecommerce startups – here is a list of sites who have $$$ – http://t.co/5YRR4tojBo
— PJ (@BeingPractical) November 30, 2013
3. Selection of Partners
What were Automobile sites, Property sites doing on Online Shopping. Some ridiculous offers included Rs. 10,000 off on your Dream Home (Really?)
4. Quality of Deals
Everything can be excused but not the quality of deals.
- Many partners (if not all) ran their regular promotions under GOSF.
- Deep discounting on Chinese & Unbranded products continued. Up to 90% off on such products.
5. Efforts by Partners
- The participating partners (many of them) are marketing it just like any other event (Rakhi, Diwali, etc).
- Existing products & offers that were run for centuries got labelled under GOSF.
- Few sites had bugs (I reported couple of them – down side of knowing too many people).
- Many partners have not made any efforts to even put up even the GOSF banner on their sites or even deals.
GOSF will be still reported as Great Success. Why?
Post end of event, many Ecommerce partners will claim impressive numbers. I am sceptical of any numbers around the same attributed to GOSF or their own internal marketing efforts.
Because – This is how my inbox looks today:
Because – This is how my SEO & SEM looks today:
Because – This is how on-site Marketing looks today:
I am not against GOSF or Google or its Partners (Personally and also because I know too many friends / acquaintances who are associated with the industry). Its a great concept and if it manages to get ‘New People To Shop Online’ (those who never did it before) its a great win for everyone (all professionals) who has anything to do online.
I don’t want to end this note on post as a critic, so here are some suggestions for the next #GOSF:
- Limit Partners under every category – Max 10 to 15. Limit Categories to 10.
- Curated by Partners, Approved by Google – Real offers, real deals.
- Limit number of products / offers by every partner to 100. Again real deals; feature them on GOSF.in
- Instead making partners spend online (SEM) – It should direct all that traffic to GOSF.in and lets users choose what they want to buy. (Google did the same for Gmail launch).
Signing off. I was just being practical. And, One more thing…
#GOSF – If your find that 50% flat off deal on Nexus 5 – please call me immediately.
— PJ (@BeingPractical) December 10, 2013
I have seen Facebook as product scale up since 2006, there was a time I believed this one could never go down. Unfortunately, I don’t see myself using Facebook everyday now. In tech world, products that reach this scale do not fail, they become irrelevant.
Facebook is fast becoming irrelevant and replaceable in our life. I love Facebook and really admire Mark Zuckerberg for building it one. I still think Facebook can still turn around and be that important part of our lives again.
Here are few things that Facebook needs to fix in its product:
1. Feeds & Notifications
Feeds and Notifications are (were?) the lifelines of Facebook. Both are quickly losing its relevance to create engagement.
The challenge with Facebook is you are subscribed to multiple content units. This includes updates from -
a. Friends & Contacts
b. Pages you ‘Liked’
c. People you ‘Follow’ or ‘Subscribed to’
d. Open Graph Integrations & Updates through Social Plugins
e. Promoted Posts
There is clearly too much of information that user gets subscribed to and its obvious that the Edgerank is failing to discover the most appropriate post for its users.
Edgerank has multiple flip points! It works on the fact that people / pages that you interact recently or regularly show up more frequently in your feeds, or the ones in your social circle that has higher engagement. That results in missing out other important updates from friends / contacts, missing that important update from your favorite band and so on.
Same with notifications, there are many irrelevant notifications that are shown on Facebook which over a time lose value for notifications all together. Facebook should restrict notifications only to posts / updates important to the user.
Facebook’s Edgerank struggles to discover the best post for you hoping that you will engage. Twitter simply says you missed it if you didn’t see it, so if you don’t want to miss any update – stay logged in. Twitter clearly works well here.
Facebook needs to fix its Edgerank to sustain itself. Maybe completely moving to a Twitter like time line will make more sense for Facebook.
2. Instant Messaging
Have read a lot of posts about how Facebook should be worried about Instant Messaging Apps like WhatsApp, SnapChat and others. While most of the posts put up the metrics like number of messages shared or photos uploaded or so on to compare them with FB, they miss a simple and crucial point on what makes them successful.
Facebook is a network that connects your family and friends. Instant Messaging apps like WhatsApp ‘connect them faster’. This was the perfect way to disrupt Facebook and it worked! Its no surprise that younger generation does not connect with Facebook- why should one sign-up, create a profile, upload status & photos and so on? Just download a Instant Messaging app and get started. Honestly, Facebook today is delayed WhatsApp’ing.
WhatsApp should have been acquired by Facebook long time back, there were rumors. But to continue to be relevant, its time that Facebook should now stop looking at its ‘messaging’ feature as a feature – but as core proposition!
Update: Few people pointed out that Facebook Messenger lets you sends instant messages like WhatsApp to anyone. I checked this again, but it looks that FB Messenger works with users who have registered their phone number with a Facebook Account. The Instant Messages are sent through to the Facebook messages in your profile. Nevertheless, the point I wanted to suggest here is Instant Messaging should become the core proposition of Facebook who wants to connect the world, and not its feature.
Its been more than 2 years that the last F8 conference was held, clearly Facebook does not have anything great on its plate for developer community. This is bad news for thousands of application developers who use Facebook (Connect) as primary platform to build their applications.
Distribution on top of Facebook is almost non-existent now (Read: Rethinking Facebook Connect). Eventually this will lead to developers looking for other platforms to build on top of it.
Twitter will stand to gain the most out here at this point of time. Google has been silently integrating Google+ to many of its services, if Google can provide ‘distribution’ as incentive to developers, there might be still hope for Google+ (of which I had been skeptical from day 1)
4. Facebook Pages are Dead.
When Facebook Pages were introduced, there was a gold rush among Marketers and Brands to get as much Likes or Fans as possible build an captive audience and engage with them on a regular basis.
Facebook pages are dead now, its effective reach is reduced to mere 2% of audience and practically they drive zero new likes / fans to the page as virality is almost dead. As a marketer, I would expect the posts shared on my pages to reach majority (if not all) of its audience.
If the only way to get any sort of engagement now is paid posts, marketers will soon realize the same and will start abandoning the Facebook. Instead Marketers will prefer sending traffic to their own website over Facebook Pages. Facebook should fix this.
Millions of publishers use the Facebook Social Plugins, more particularly Like, Share widgets on their websites; the motivation here is to drive more traffic (users) from Facebook. It worked earlier as Facebook was a awesome discovery platform to know social actions of friends & contacts.
As engagement and virality of Facebook platform has decreased, these social plugins are proving to be lesser effective in driving more users / traffic to publishers.
6. No Mobile Presence
Post IPO Facebook (and analysts) were worried that Facebook did not have a solid mobile monetization strategy in place. Its solved now as mobile revenue contributes significantly to Facebook’s revenue. However I think it was not so much about mobile revenue, Facebook missed the mobile ecosystem completely. It does not own any of the core-experiences on mobile.
Look at smartphone on device strategy -
- Calendar is owned by Google (Calendar).
- Contacts are owned Google (Gmail).
- Messaging is owned by WhatsApp & others.
- Camera was owned by Instagram (acquired by Facebook) but faces intense competition from other apps like - Twitter, SnapChat, FrontBack, WhatsApp and others.
- Location is owned by Google (Maps).
- AppStores are closed. Owned by Google or Apple.
While Facebook Home was a great attempt at ‘hijacking’ the phone experience, but with no value attached for users the product dried down quickly. With no deeper integration on phone, Facebook is just another app. And as other apps deliver more value while communicating with friends, Facebook is very vulnerable to being an ‘optional app’.
Facebook needs to re-think its strategy and focus on making its product relevant. Not just for its users, but also for other stake holders like Developers, Marketers, Publishers and so on.
Out of context, but I find Facebook’s intention of getting the entire planet online (Internet.org) ridiculous and a big distraction for both – Facebook & Zuck. Facebook did an amazing job of getting over 1 Billion Users on its platform, but to think that Facebook and its partners (of Internet.org) will manage to get the next 2 Billion Users online is absurd.
Unfortunately for Facebook, the next Billion users will come online because of instant messaging apps. For now, Facebook should just concentrate on its product.
About this time last year, I wrote about my experiences as an entrepreneur. Another year has passed and also that Wishberg completes a year, I am sharing some notes I scribbled thinking about the time that has passed.
- Having your own product roadmap is one thing. Building what users ask is another. Choose what the user wants.
- Most successful products have very similar characteristics. Here are 15 Steps towards building a Great Product.
- Scaling up is much simpler problem to solve. Concentrate on initial growth and traction. When you come to a stage where you want to scale, there will be enough money in the bank.
- Ship Fast. Let things break. Often.
- A bug is bug only when its noticed.
- Focus on doing one thing right. That is enough. We decided to drop everything we did and focus on ‘wish’ for Wishberg.
- Chase a vision, not an idea. When you have a vision, you will get 100 ideas to achieve that.
- For success you need to try 100 things, one at a time. Make sure you have enough runway to try those. One of that will work. If you are lucky, that would be your first; if not then start-up life will test your perseverance.
- Break your long term strategy in to multiple short term targets.
- Spend over 30 minutes in shower everyday. You will never run out of ideas.
- Concentrate on doing one thing right. You may still fail, but its far more better than getting distracted by trying 10 different things.
- Growth hacks that have worked for other startups will not work for yours. Startups can’t be so easy. Find your own hacks.
- Success is not easy. Don’t expect it to be.
- Every week try to use your product as a new user who has not used it earlier and knows nothing about it.
- Doing a startup has a huge personal opportunity cost, no one talks about. This too shall pass, I tell that to myself. Everyday.
- Entrepreneurship is not sexy. I personally discourage people from taking it up. Specially the ones with a family to support.
- Anyone can take decisions with data. And data may not be available always. Nothing new or ground breaking was ever built based only on data available. Trust your instincts / guts to do build something new.
- Try and fail, don’t fail to try.
- Luck is important factor. Wishberg got funded the same month I was about to run out of money. I already ran out of my funds and savings long time back, I refer to the personal loans I took up to keep it going.
- Startup as early as possible in your life. Debts, Loans kill your ambitions. Everyday.
- Everyday will give you 100 reasons to close down. You need to have that one strong reason to keep it going.
- Delegate. But be hands-on. You should know more about your business than anyone else.
- Team is your family. Choose wisely whom you want to add. Genuinely love your team and be concerned about them and their well being.
- Fight. Argue. Debate. Discuss. Don’t carry things outside office. It all should get over by the day.
- Ignore 99% advice you get. The 1% that comes up again and again – think about it.
- Funding does not make you rich. No matter how much you make others understand it, they will not. Stop wasting your time.
- Everyone struggles. Even a start up without funding. Even a start up with millions of dollars of funding.
- Funding just gives you a little more runway. To try out multiple things. Its just a little more runway.
- Unfortunately funding is perceived as success. I received invitations to speak at conferences just cause we got funded. Damn! And no one ever called me for any discussion or debate while I predicted Indian startup scene so accurately. tl;dr – I’m not going.
- Investors who take over a week to come back to you; who say keep us posted; who say lets keep in touch and so on – will never invest in you. Don’t waste time on it.
- Investors who really want to invest in your startup will not take much time to do it. One of our investors committed to us over a Twitter DM in less than a minute. Another one on WhatsApp again in about 1 minute.
- Investors fund / invest in you. You. And your ability to grow the product / company.
- Don’t say no to money when it comes knocking your door. I said no to it twice (rather my ego said no it). Cash in hand is much better than perceived valuations.
- Don’t choose investors based on the valuations. The best investors bring in value. The worst investors bring in just cash.
- Build feature products (unlike what investors / advisors say). But build that simple feature as a freaking awesome product that everyone wants to use.
- Check the history of acquisitions by Facebook or Google. Your feature product is more likely to be acquired if you build it right.
- Choose team, advisors & investors with whom you can talk about life over couple of drinks.
- Build something that you understand and believe in. Don’t build what will get funded or is generally considered hot.
- Never understood why using foul words in startup ecosystem is considered cool. I don’t think its cool.
- Let go of ego.
- Anyone who says they will disrupt are just talkers. Just be willing to change and adapt.
- Disrupt slowly. Unannounced. Feature by Feature. Before anyone realizes what happened.
- Competition will exists, don’t be afraid of that.
- One fine day Facebook, Amazon or Google will try to build what you are building. Its sounds scary, but its fun. Btw, I almost cried when Facebook launched a ‘Want’ button or Amazon started Collections or Pinterest tried to position itself as wishlist from a online pin board.
- Meet lot of users, lots of people. Get their ideas on your business, product. Some simple things will amaze you.
- Be Humble. Be Genuine. Its not very difficult.
- Smile. Have fun. As many times as you can.
- Build relationships. Specially with other startup founders. Some of them might be at the lowest phase in life, be there. At times they just need someone to talk with whom they can relate.
- With more power, comes more responsibility. With more responsibility, comes more stress.
- Do something to de-stress you. I try blogging, driving, and observing people when I travel by Mumbai Locals.
- Spend at least 1 hour reading up everyday.
- Spend one day of every month with your family and friends. Try to be away from the Internet on that day.
- Every mistake should be made only once. You don’t have time to repeat it.
- ‘Fail Fast’ is a buzz word. Failure comes with cost – money, time and spirits. So you can’t really fail fast.
- Value money. Think 100 times before you spend even a single dollar. Negotiate hard. Every dollar saved adds up to your runway.
- Don’t do anything or spend time behind anything (feature, update, task, product, or anything) that does not personally excites you.
- The single most difficult task of a startup founder is setting priorities. If you get it right, your job is done. 9 out of 10 times you will go wrong. Don’t regret, keep moving.
- Simple, short and sweet updates to your product bring the best results. Don’t over think or focus on too many big features.
- Focus is about saying No. Stop agreeing too everyone and everything.
- You learn most not from blogs or advisors or investors. You learn most from other founders. Connect and share your learnings with each other. We organized a #FoundersMeet in Mumbai.
- People around you are smarter than you think. Learn from them.
- The most important thing in life is not knowing everything, its having the phone number of somebody who does.
- Stay away from events, conferences and pitching events. It takes up a lot of time and energy. Both are precious.
- Be passionate. Be enthusiastic. About every new day.
- Not just your startup, even you as a person should grow yourself every day. Learn at least one new thing everyday.
- Have a bucket list for life, here is mine. Check it every morning, if you see things / wishes that are yet to be achieved, get back to work. Wishberg helps you build and manage your bucket list.
- Plug-in your startup in every possible way. I just did that in above point. But no kidding, having a bucket list is actually very inspiring, I have one since last 6 years.
- Every morning make a list of things / tasks you plan to finish in that day.
- If you are out to achieve something, achieve something big. Don’t set mediocre goals.
- Content or Commerce doesn’t go hand in hand. Most startups trying to do both get confused on what they really want to achieve. They really do. Focus on one.
- MVP is More Valuable Product. Everyone wants a more valuable product, no one wants a minimum viable product.
- Build your startup for growth. Not for exit.
- Ask questions. Lots of them. No matter how silly they are to you or the person you are asking for.
- Execution is everything. All ideas are equally great on paper.
- Startups are not easy. Neither is life.
- Build something awesome. Something that people will love to use.
- Be thankful to everyone you has helped you in this journey. Make sure you help others in their journey so that they can say thank-you to you. It feels great!
Day 1 of Product Launch is a mix of joy & disappointment. Joy because you launched your product after days (or weeks or months) of hard work and disappointment because those first 1000 users did not join on day 1.
In the last post, I mentioned about reaching to startup and tech influencers to spread a word for your product when you announce the launch. Next step is spreading word to get those initial beta users beyond your circle of influence + taking steps towards SEO through first 100 backlinks for your product. How? Submit on all important startup directories.
I have shared 100+ directories (startups, beta users, search engines, etc) here to begin with. If there are more that I might have missed – please tweet to me on @beingpractical or email me on pj (at) beingpractical.com to include in this list.
About 3 – 4 years back, Facebook Pages was a hot property. Till just some time back, every brand, every advertiser wanted as many “Likes” as possible. At peak of this trend, some brands even did press releases on reaching 1 Million Likes.
Here is some bad news for Social Media Agencies, Consultants and every concerned with Social Media, Facebook Pages as a product has reached end of its life cycle and is no more valuable for brands. Why do I say this?
Check the metrics for some of the most popular internet brands in India and also International brands.
As defined by Facebook, the ‘People talking about this’ includes – likes, comments, shares, answering a question, responding to a event and claiming a offer. The average ‘People Talking about This’ is drastically reduced to just about 2%.
Why is this happening -
- Facebook has two current priorities – Improve (and retain) User Engagement & Grow Revenues.
- In a attempt to retain user engagement, Facebook wants users to engage with each other (people to people) and not with applications or pages.
- To grow revenues, Facebook wants you to pay to reach its audience. If the natural viral factor is high, brands no longer have to pay Facebook.
- More pointers on this in my earlier post, where I said Facebook is no longer a powerful distribution platform.
What this implies -
- Most pages listed above are currently (probably) not advertising on FB. It effectively means that the natural engagement of a Facebook page is now at a average of 2%.
- If only 2% of your page audience is going to engage, the ‘viral factor’ that introduced new users to your page will be a minuscule number.
- If a brand has gathered Facebook Fans / Likes by doing advertisements for its pages, value of the money spent is $0 today.
- In case you are running any advertisements to get Likes to your page, consider halting it.
- The only way to reach your own audience (people who have liked you) is using advertising tools like ‘Boost Post’.
So why is it a dead product? If a Facebook page (as a product) that has over a million users connected to it, but generates only 2% engagement and possibly even less viral factor is as good as dead. As a transaction product (like ecommerce) the conversions from Facebook Page will be further down since your posts reach a smaller percentage of ‘your Facebook audience’.
Going forward if the audience that you are building through Facebook Page is never going to engage with your posts, it might be a better option for advertisers to consider simply running CPC advertisements to target the necessary demographic, take users to their website and engage them there (back to pre-social media days of Facebook).
If you are a start-up building products around Facebook Pages or anything that concerns with distribution through Facebook Pages or even through Facebook, take a hard look at the data / funnels.
Some exceptions above are Mashable, BuzzFeed and 9GAG. Why? Because they are in the content business (yes Mashable too, in my opinion its no more a social media site) and for the fact that they have exceptionally high engagement numbers is probably because they are the only ones doing content marketing right on Facebook!
For everyone else, no one really is talking about you on Facebook. Not unless you are paying for it!
Many founders struggle in getting a word out for their products or startups – its crucial, something that makes or breaks your startup in its initial days. While tech press and coverage for startups is one thing, its important to have early adopters talk about your product and suggest them to potential users / customers.
India ranks among the top 5 countries by users for global products like Facebook, Twitter, Quora and so on. Clearly we have enough early adopters, question is who?
Below is list of people that I have compiled and consider tech influencers whom you might want to connect with to get a word out about your startup. Good luck!
Things to note -
- List excludes VCs or people directly associated with Accelerator or Incubators. Their tweets reflect vested interests in portfolio companies. I don’t consider them influencers.
- People mentioned here frequently tweet / talk about startups and new products.
- I don’t know many of them personally or follow many of them myself; however they keep appearing on my timeline again and again.
- I plan to keep this listed updated, if you have any recommendations – drop me a email on pj (at) beingpractical.com
Disclosure: This list is not compilation of users who tweet about Wishberg (my startup). In fact many of them don’t even have a account on Wishberg. But this includes my name somewhere in between
Twitter was a product till few years back., its now a powerful communication tool. A medium to stay updated! What you get out of Twitter is simply based on whom who follow.
As a open communication medium, one needs to tweet responsibly! Twitter can get highly addictive and if you are tweeting too much, you may be spamming your follower’s timelines with tweets that may be senseless for many.
I have followed this equation, which now I call the PJ’s Equation of Tweeting.
PJ’s Equation of Tweeting: Total Tweets < Followers x 10.
Though it looks simple, it really works (for me at least).
- One needs to Tweet responsibly, cause the tweets are limited.
- With every new follower, you earn right to tweet (10 tweets); and with every lost follower you lose that. Makes me tweet with care.
PS: Total Tweets includes everything – tweets, replies and retweets.
PS 2: If you just joined Twitter, the equation will not work. But as you get regular, it should.
PS 3: If you are celebrity in real world (or if you think you are) then: Tweets < (Followers / 10).
2 years back I wrote that India has a premature incubation model. Things have changed now – Accelerators / Incubators is the new trend here. Simply too many and too much buzz around it, its all smoke without fire. I had a unfortunate encounter with one of organizers of an accelerator who claimed that its program is more beneficial for startups than YC or 500 Startups. That incident still makes me laugh, wrote about it last year.
This post are suggestions to Accelerators and is based on my personal interactions with many startup entrepreneurs, investors and enablers in ecosystem.
1. Stop looking for startups with traction.
Accelerators start by looking for startups with traction. Its puzzling, because startups with traction are looking for investors, not accelerators. Wouldn’t it be simply awesome if accelerators start saying – ‘Join us and we will ‘help’ you gain / build traction!’.
Unfortunately, since there are too many startups, the competition and market dynamics will not make this real. But seriously, can some accelerator stand up and say - ‘Join us and we will ‘help’ you gain / build traction!’. Entrepreneurs will have more faith & trust in you.
2. Be a little transparent.
Your metric for success is simple – success of the startups that have graduated from accelerator. Tell us that story, maybe you could learn a bit from TechStars that lists detailed performance of its portfolio companies.
No matter how flashy personal brand you manage to build for yourself, all that any entrepreneur really cares about is his / her own startup. So let startups that are applying to your program judge you ‘only’ by performance of your earlier startups.
And if your startup performance report is bad, here is some ‘free’ advice for you – pivot!
3. Prove your worth before asking too much.
With exception of few top accelerators, most startups end up applying at other accelerators after they have failed to raise investment from angels or failed to get through the top accelerators (yup, I am being practical – this is the reality!).
The top accelerators take between 5% to 8% stake in a startup for $20K to $50K. You be the judge how much equity should a startup give you, in my opinion it should definitely not be more than 5%. Don’t act too pricey, you will have to prove your worth before you ask for anything more. There are also bootcamps and acceleration programs that offer similar benefits for startups at no investments / no equity.
Also from perspective of founders, 8% to 15% dilution at accelerator (some startups go through 2 accelerators), 15% to 25% dilution at seed / angel-round, 20% dilution at Series A. By this time with a 10% ESOP pool, entrepreneurs are just left with their skin-in-the-game.
PS: And if you are adding clauses like permanent non-dilution; offering your (little) cash in tranches or after several ‘gentle reminders’ from founders – there is a special place reserved for you in hell.
4. Startups are not one night stands.
No matter how much accelerators would like to think they can change the fate of startups in matter of few weeks – they are wrong. Startups take years to grow, they are not overnight successes as many people perceive them to be and most of the growth comes once they face the real world (which is after the demo day). It takes time to find the product-market fit and it comes with multiple iterations on product.
Your so called focus on batch after batch, this sounds like one-night stand with startups. Founders have trusted you, please get into a long term relationships with the startups. Be there when they need you (and even when they don’t).
5. Your partnerships with Investors means nothing to startups.
Many accelerators ‘flaunt’ their partnerships with venture capital firms to startups and also occasionally drop names of influential angel investors. First time entrepreneurs are often misled by such talks and tend to think it as an assurance that they might be funded on graduation day / demo day or their chance of getting funded is higher through a accelerator.
Honestly – these partnerships mean nothing. Venture Capital firms are always on a lookout for their deal-flow; the word ‘deal flow’ explains almost everything in this industry. Any partnership that any VC has with any accelerator is only for the purpose of deal flow, they do not want to miss out on any hot startup but this partnership is definitely not a investment commitment (unless it is on lines of YC - $80K on convertible notes).
6. Be more transparent on utilization of time (and funds).
Not many accelerators (and also many entrepreneurs) realize that the biggest resource startups should be worried about is not money, its time. Time runs out fast, for everyone.
While there are programs and activities that directly add value in building product, any time that is gone outside of that (relocation, attending events, visiting places and so on) means staying away from building product which decelerates the start-up. Make founders aware of that well in advance – so that they can make their plans accordingly or alternate plans like one of the founder stays back and manages day-to-day tasks.
Same with funds, if there are any programs, costs (legal, travel, etc) that will require startups to pay the accelerators – please be transparent about them and mention that to founders well before they join the program.
7. Mentoring the Startups
The kind of startups entrepreneurs are building today did not even exist few years back. The skills startups required today are – design, data, distribution, product and technology. Unfortunately, we do not have great talent for these verticals in India.
So accelerators are getting investors to mentor startups, this is where the model starts falling apart. 99% of time the investor will be advising / mentoring the startup without using their product or experiencing its service! I don’t mean to offend anyone here, but the fact is – Investors should be investing, not mentoring! (unless they have skin in the game).
Take a break, read this post - Great Entrepreneurs will listen to you but will follow their own instincts.
Be valuable to the startups in your accelerator and get mentors who can really help them grow. Get Entrepreneurs or Senior Executives (who are entrepreneurial or proven achievers) and have skill sets that startup needs to mentor them. Alternative suggestion – get founders or executives from known Silicon Valley startups to mentor!
Mark Suster said few days back at PreMoney conference – ‘Networks of entrepreneurs helping each other are significantly better than board meetings for learning.’
8. Your over-extensive focus on demo day kills few of your startups.
If I were a part of any accelerator, I would have opted out of the demo day. Simply too much focus on demo day! Of the 12 week acceleration program, 3-4 weeks (effectively 33% of time) goes in its preparation, that is not all since you get in to meetings, introductions and so on, the chances are you will spend next 4 weeks on those follow-up meetings.
Mark Suster says it best – Demo days are showcase of who is best at on-stage presentations ~ coached and polished. They produce too much hype and too little value. Also in another post (more from a VC perspective), Mark explains the importance of proprietary deal flow for investors.
If you are observing this space – you would realize that even the startups graduating out of top accelerators are struggling to raise investments. Not all of them are getting funded or are able to close their investments quickly. Probable reason – too many startups? too much hype? could be anything else.
Elad Gill wrote a brilliant post on VC Signaling last year. I believe similar sort of signaling happens with startups in any accelerator too. In a batch of 20 – 40 startups, investors are bound to choose the best – the top 20%, or the best 4-6 startups that stand out on demo day, rest 80% startups will not find it easy to raise investment.
Worst is negative signaling effect, if any of the startups from that batch are unable to close investment in next 4-12 weeks post the demo day, it will be bit tough for them to close it going forward unless they get some significant traction.
So instead of flashy demo days, accelerators should focus on getting one-on-one interaction between startups and investors. Although it is apparent that from every batch there will be few standout startups., as an accelerator you need to give a fair and equal chance to every startup in your batch. For raising funds demo day works for few startups, but makes it difficult for many startups and unknowingly kills few.
Treat demo days as a demo day – show what product you have built! Not just to investors, but also to influential early adopters and potential partners.
9. Help startups with distribution. Not pitches.
Because of these demo day pitches, there is a certain glorification of startups – even before they are worth glorifying. Companies need to be glorified by their traction, revenue, customers etc not because of a nice punchline and a great deck. Demo days are setting a wrong precedent in the very first place. Pitching has its own importance but most founders today believe that’s the only thing to do.
I have said this multiple times – the easiest thing a startup can do is to build a product or pitch to investors. Toughest thing is – finding product market fit & distribution. Unfortunately, most accelerators are trying to help startups with easier tasks, not the critical ones. Startups don’t fail because of lack of money, they fail because of lack of product adoption.
If it is a consumer startup – accelerator should help it achieve its first 25K-50K users. If it is a enterprise startup – accelerators should make introductions to potential clients and help them get their first 25-50 paying customers. When a startup succeeds on this – they will not require to pitch any investor at all!
Most accelerators ask startups on what they are innovating on, while they are trying to replicate the success of YC. The intention of this post is not to criticize accelerators, but a feedback for them on how they can start being more valuable to their customers – the startups!
Credits: Thanks to Kulin Shah (Co-founder at Wishberg) & Avlesh Singh (Co-founder at WebEngage) for reading the draft and their suggestions on this post.