The right Motivation to startup
“Disgusted that a video rental store raked him over the coals for returning a movie late, Reed Hastings created Netflix. Seventeen million subscribers later, some people probably wish a clerk would have just refunded the man his 40 bucks.” -
“Hello, I am Macintosh. Never trust a computer you cannot lift… I’m glad to be out of that bag” – talking Macintosh Computer., Apple
Larry Ellison was inspired by the paper written by Edgar F. Codd on relational database systems called “A Relational Model of Data for Large Shared Data Banks”. He founded Oracle in 1977, under the name Software Development Laboratories (SDL).
“to organize the world’s information and make it universally accessible and useful” – Google Founders
Bezos named the company “Amazon” after the world’s largest river. Since 2000, Amazon’s logotype is an arrow leading from A to Z, representing customer satisfaction (as it forms a smile); a goal was to have every product in the alphabet.
The greatest technology industry leaders in the world started companies that are hugely successful today as they had envisioned the future very early, typically because of their personal experience with a problem. This personal problem or issue that was nagging them inspired them to drop whatever they were doing and make a life changing transformation to go out and follow though with their inspiration. “Tech” companies founded in this manner went on to change the world and become large business leaders. The founders were following their heart and dreams and did everything possible to make their dreams a reality.
“Motivation” to do something that arises from the intent of I can do something to “make the world a better place” is extremely powerful. There are 1000s of Tech startups that are being created every year. In the world we live in, “Success” is measured purely by the financial impact a company is having.
This, very inspiring TED talk on ”Motivation” provides evidence that reward based motivations generally work for very task oriented mechanical work but not for creative/inspirational work.
I love this creative version of the same talk
In my experience (I don’t have any empirical evidence though) there are two types of founders:
1. Founders that are inspired to change the world and have a strong vision around a generally profound idea or a flash of wisdom
2. Founders that do startups based on very well researched plans, copying a trend or a phenomenon, doing lots of market analysis, spreadsheets and scheming to get rich
In general the founders in the first category go on to build companies that are very successful while the ones in the second category either fail or build companies that are not lasting.
A lot of people I meet in India are enamored by the terms “startup” and “entrepreneurship” but don’t really seem to understand that to be successful the motivation to do a startup has to be right. The pre-condition to starting up is to understand that success in the way the world expects us to succeed (i.e., financially) is not guaranteed. Once you have this clarity you really need to ask yourself if you are willing to commit your time and resources for an indefinite period of time to achieve your dreams whatever be the outcome. If the answer to this is “No” then do not startup. If you are doing a startup to look cool/hip, to make a statement, to get rich and famous then question the motive.
My motivation to do paisa.com was to fix the frustration of dealing with the sub-standard, poor quality, me too consumer finance portals / online brokers in India when I had exited Zimbra and wanted to invest my money in the Indian markets.
As Confucius once said “ I hear and I forget. I see and I remember. I do and I understand.” If you want to understand the world of startups, Just do it!
Interesting viewpoint Abinash. Do you not feel that founders who fall under category 1 should or would in general run the company out of their own resources in a bootstrapped manner for some time? I mean, if the intention is to change the world, its not obvious that it would be a business opportunity and even if it was a business opportunity, one that had scale and so could justify taking capital from a class of investor who need to exit with 10-20 times their money at the minimum to justify their existence.
Roshan Dsilva
January 19, 2011 at 4:39 pm
Yes and No. If you are a first time entrepreneur at some point you will need capital to get your idea off the ground to some level of traction and scale before the business can generate positive cashflow to sustain. Apple took money from Sequoia albeit at not the “very early” stage of their existence. Jeff Bezos took $100K from Madrona Venture group in 1995 and so on.
I think Indian entrepreneurs are the most mis-informed about Venture Capital. VCs are not evil and are not around just to force companies to exit, or screw founders. VCs provide financing at the highest level of risk (banks don’t finance tech startups for a reason – it is high risk where outcome is not guaranteed). We get to hear all the VC horror stories from disgruntled founders as they feel they have been wronged. For every negative VC story there are 100s of great VC stories. The best VCs add so much more to the company other than sheer capital.
Abinash Tripathy
January 19, 2011 at 5:03 pm
Noone’s debating the VCs, their intention or their value add. We are lucky to have a great bunch of guys in India. The point is the business- when starting up with a mindset to change the world or an industry- is the entrepreneur even thinking about revenue and running a business? Does he bother about the size of the market or spend his time figuring out market size? I doubt it. These however are a must before getting in external capital. The entrepreneur wants to change the world – other investors are primarily in it to make real money. Of course they are making money in a noble way but they have to be clear on the numbers before making an investment.
Roshan Dsilva
January 19, 2011 at 5:12 pm
Anyone that is willing to put their hard earned money and not just sweat has already demonstrated a much higher level of commitment to their startup than someone who just wants to put in sweat. So, in a way you are right. But, in the context of India where there is so much disparity in Income between the west and us, we can’t expect a startup founder to be able to fund their startup with their own cash till they can start generating cash to sustain. I know many examples of founders in India who have given up after they run out of cash and were not able to raise VC money. Point I am trying to make is that if your motivation is right and the VCs can see it clearly, they will invest even at the idea stage. When passion does not show, VCs typically don’t engage. There are so many examples of successful Indian startups that reached a certain scale just by themselves and then took VC money to scale the business. Quickheal in our backyard in Pune is one such story with amazing young founders who took money from Sequoia at a fairly late stage and are doing well.
fyi… we took in a $500K seed round recently from someone we wanted as our partner and not because we needed money. I had invested in our company for a year and could have sustained the burn for a long time. We did not have our numbers together and the VC we chose to work with were betting on us as entrepreneurs and not on the idea. In fact, when they wrote us a cheque we did not even know which of our 2-3 related ideas we were working on would be the one that we would bet on for the long term. We chose not to work with a few A grade VCs who I will not name who were interested a lot in the numbers alone and not in us the people. At the seed/early stage good VCs really are betting on the team and not the idea. Good teams are nimble, can spot opportunities and pivot themselves and challenge their initial assumptions and change course. Apple started out making DIY computer kits before they built the Apple I. Amazon started out selling books and CDs before becoming a store of stores and providing cloud infrastructure.
Abinash Tripathy
January 19, 2011 at 6:09 pm
And Just for the record – Amazon took 50k from Tom Alberg of Madrona in Dec 95. He and his family had already invested ~300k in the business from July 94. The first real VC money was Jul96 by KPCM – 8mn USD. Essentially the Bezos family funded it for 2 years from July 94 to July 96. The cap table is here https://spreadsheets.google.com/ccc?key=0An5RdSP7WpcwdE5CSWFQcXNEUFlzSEZnWXdPTi1zYkE&hl#gid=0
Roshan Dsilva
January 19, 2011 at 5:26 pm
great article….i will keep this in mind
shiva
January 28, 2011 at 12:30 pm