Monday, December 29, 2014

#Startups: #CashFlow, #Revenue - in that order

Well, there are midlife Entrepreneurs. . Currently we are working together to build what we believe has strong uniqueness. Well, let me keep the 'what we do' apart. At your mid-life, the adventurism is gone, as life overalls mellows you with its experience, and Mr. Surprise is not a welcome visitor. Now, we want many safety nets to become an entrepreneur.
The fundamentals of business remain the same. The most important aspect comes to survival - or the oxygen mask, so to say. This is in the form of cash flow. Cash in is always equal to or greater than cash out. Now the source of cash in could be sales revenue, capital investments or loans. When sales revenue is the only source for cash inflow, ideally then the organization is said to be 'funding itself' or running on 'revenue accruals'.
Cash flow is more important than sales revenue, as sales revenue is, as mentioned only one of the source cash inflow. As an entrepreneur it is important to put a chronological approach to cash flow so that you know exactly how the entire month pans out.
Cashflow, Revenue: In that order. 
Month? Most of us look at bills, salaries to employees etc., which is on a monthly basis. If our expenses are monthly, it is only natural for us to measure our income monthly. Even entrepreneurs' expenses are monthly. So what we are essentially looking at is - monthly sources of income. Hence cash flow supersedes any other form of measurement metric, because this is a survival metric.
This is not to discount the importance of sales revenue. Right from the minimum viable product ( MVP) to successive versions, there is only one version - monetize, monetize and monetize. This is a proven successful model for managing investors, and also attracting higher valuation.
So, the priorities are cash flow, followed by Revenue. Everything else, including Brand, and valuation follows later. However, there are exceptions. We will deal with them in a subsequent blog.
- Ashok Subramanian
(C) Cherunathury Tech Ventures 2014

Tuesday, December 16, 2014

Finding a co-founder - 2

This time, we visit the most important aspect of finding the co-founder.  This is called a co-vision.  This is the basis on which the co-founders shall connect.  This is something that cannot change over a period of time.   This is not an option and cannot be point of disagreement.  Broadly, the thoughts have to be in sync, and therefore, the vision is signed in blood.

Now what is a vision about? This is about a cause.  This need not be a social cause.   It has to solve a problem of some sense, any sense, and that is basically creating value.  A vision creates value.  But an application, product or device that solves a problem is only one aspect of the business.  A company can actually create multiple products. So are we in the game to create one product only? That is a call that the co-founders need to take.

One can be a co-founder in multiple companies based on common visions created.  In that case, some of these visions are single, short term and need not last for a life time.   Now, large organizations like Google, Apple, Microsoft or Flipkart have a long term vision.  This vision is sustained over a period of time and not dictated by one single instant of agreement.  This is key for an organization's co-founders to be aware at the early stage. 

What is a vision?  There is a cause that one person has, and broadly other people agree.  The finer aspects can be worked out, considering other five attributes.  However, the agreement on the vision is the most important thing for the long term success of an organization, especially between co-founders. 

- Ashok Subramanian

(C) Cherunathury Tech Ventures 2014

Saturday, December 13, 2014

Enlightened Entrepreneur - Finding the co-founder

One of the most important aspects of a startup is identifying a right co-founder.  I have come across serious discussions on co-founders, and even  job descriptions of co-founders!  What is surprising is the qualifications are very specific, and as if co-founding is a role to be executed.  There are few very important aspects of co-founding which should be the basis of the search.

  • Vision - it might be the founder's vision;  but if it does not turn into a potential co-vision, or if the interest is not innate, then the co-founder will have basic differences in terms of how the organization will grow.  The vision is not at a product or singular proposition level ( unless the business being started in a one-trick-pony), but at an overall agreement that the vision of the co-founded organization has to be a synchronous, long term one, and not myopic. 
  • Passion - This is the second most important aspect.  Passion for driving the vision, in terms of positive contribution, being a sounding board,  deep diving and involving in problem resolution and when it demands - be a hand on the deck.  
  • Commitment on time and resources - Either capital, skill or energy, is what a co-founder brings to the table.  This commitment is necessary for the co-founder to be a partner; even the term sleeping partner, has a worst case liability of satisfying legal norms, or a dead-pan investment.  
  • Complimentary Skills:  Identification of specific roles and responsibilities of the co-founder - typically the co-founders own some function, and the skills attributed to the co-founder is complimentary to others.   In short, all the founders together make the organization complete. 
  • Chemistry:  It is important to recognize personal and professional space between co-founders.  Co-founders may have different lives, or they may even be spouses.   There are organizations that are family driven; and the issue is being too close.   On the other hand, there are people who get to know each other as they start business, here is the case of being too far - that the trust is never truly established.  
  • Role:  Usually the organization roles are divided into - visionary, executioner, problem solver and builder.  These four roles have to be identified,  one person can don multiple roles.  But a clear identification of the role vs person. 
The above aspects affect the organizational business, revenue and operational plans.  The clear definition helps the long term success of an organization.   Wish you all the luck to find the right co-founder!

- Ashok Subramanian
(C) Cherunathury Tech Ventures 2014