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Building bootstrapped businesses_srikrishna_2010_mar_unpluggd
1. d
Boot strappe
Building Businesses
^
@ksrikrishna
http://ksrikrishna.com/
2. Selling stuff
people are
prepared to
pay for
Building
Usually involves
people and laying
a foundation
3. Should you stay?
โ In my fourth startup (2nd as founder)
โ busy making mistakes every day
โ Sunk/shutdown at least one business
โ with over 1.5M investment while at Sasken
โ Worked as #2 guy in at least two startups
โ before quitting in frustration
โ Built a $50M business within a 600M company
โ the product marketing manager
โ Build one business with $20K cap., $0.5M angel
โ Sold the business at $9M
6. The Journey (3/3) the process
& journey
are the most
important
part of it
Flickr joiseyshowaa
7. Basic Business Cycle
โ <assumption>
โ [Customers are out there]
โ [They have an unfulfilled need]
โ [Your product &| service addresses it]
โ [They are prepared to pay for it]
[You can access them/they can reach you]
โ
โ [What they pay you is more than what it costs you]
โ [You make a profit]
โ </assumption>
โ [Repeat cycle]
8. Reality Check (1/2)
โ What's the ratio of
โ engineers:sales:others?
โ What's the R&D expenses
โ as % of sales?
9. Reality Check (2/2)
โ What does their P&L look like?
โ Revenue
โ Cost of Goods
โ Gross Margin
โ Operational Costs
โ R&D expenses
โ Marketing expenses
โ Admin (SGA) expenses
โ EBDITA (PBIT)
10. Startup Reality
โ Average US startup took nearly 8 years (yep eight)
โ to get to $50M revenue
โ Microsoft took 8 years & Oracle took 10
โ We took four years to get to our 1st million dollar year
11. India Funding Reality
โ Angels
โ ex-entrepreneurs, HNI, non-blood relatives
โ Usually betting on the person (you)
โ Finite money and finite help to step up or scale
โ Family & (soon to be ex-)Friends
โ Where much of the action is to get rolling
โ Bootstrapped
โ Customer foots the bills
12. India Funding Reality
โ VC are businesses too (duh!)
โ Ideally (un)reasonable risks for unreasonable returns
โ Eco-system is far from ready
โ We should quit all this Silicon Valley of India talk
โ Entrepreneurs are far from ready
โ We have the spirit (motivation) but the flesh (skills) is weak
โ Most of us are unfundable
โ Doesn't mean we won't get funded!
13. Your Motivations
โ Why are you doing this?
โ What constitutes success?
โ Is that what your partners think?
โ How long are you prepared to go at it?
โ Why or why not?
14. Our story โ the beginning
โ Want to build a tech product company
โ Out of India โ maybe in DSP area? EDA? wireless?
โ Pitched 13 different concepts to customers
โ Over a six month period
โ Mostly B2B concepts โ ranged from
โ deeply tech (chip design, DSP software) to
โ enterprise apps (sales automation)
โ All but one founder held day jobs
โ Got first 15K service contract, hired one programmer & bought computer
โ Operated out of founder's apartment
โ Lost one founder in year 1 (culture)
15. Year 1-4
โ Finally picked Bluetooth over Wireless (this was '99)
โ Because latter required 10K payment for group membership
โ First 3 clients (350K, 250K, 200K) landed with Powerpoint
โ Leveraged relationships and hustled like crazy
โ Screwed around nearly 2 years to deliver product(s)
โ Lost first 3 customers :-) and brought in more (Japanese) customers
โ Tech market imploded in 2000
โ Bluetooth declared (nearly) dead at least twice 2002/3
โ Broke even in year 4 and realized we are a business
16. Year 1-4 Behind the scenes
โ Brought on chairman who knew banks
โ Arranged for 250K line of (packing) credit
โ Borrowed 350K between angels & family โ interest bearing
โ Hired (& fired) sales guys in NA & Japan
โ Put our own guys in NA & Japan
โ Shut down VLSI initiative & outplaced people
โ Shutdown 1 (profitable) service client
โ Made the transition from software to system company
โ Employee 18-34 turned out to be wrong fit
17. Year 5 - Focus
โ Focused on stereo music over Bluetooth
โ Transitioned Japan service business to 3rd party
โ OEM focus in North America & Europe
โ Silicon vendor partnerships/licenses for royalty rev stream
โ Reference design as a means to sell software
โ Major account strategy
โ What is our growth strategy?
18. Year 6 & 7
โ Competitors get snapped up in marketplace
โ We develop Plan B to enter retail stereo headsets
โ Hippo LifeStyles Pvt Ltd. Singapore
โ Customer express anxiety about us being acquired
โ But unwilling to acquire us themselves
โ We hire an investment banker from the Valley
โ They run a good process with 4 final bidders for Impulsesoft
โ We opt to get acquired by SiRF as we deem best fit
โ We were partly wrong โ for cultural reasons
19. My $0.02 here
โ Focus on building revenue (model)
โ Paying customers are always good
โ Refine, tweak and re-do as needed
โ Customers & revenue will keep you honest
โ You'll have better funding options, hopefully
20. Takeaways
โ Product is only part of your business
โ People are the major component of your business
โ Better enjoy the journey
โ Belt up it's a roller coaster