Should aspiring entrepreneurs work for a startup or large company

before doing their own startup?

I think it is a good idea for aspiring entrepreneurs to get some experience of working with a startup as well
as some experience of working in a large company.
Heres why: Working with a startup and working with a large company offer very different learnings and
experiences for an aspiring entrepreneur.
For example, working in a startup helps an aspiring entrepreneur understand how to make things work in a
resource constrained environment, how to hire people when you are not a known brand, how to be flexible and
nimble, etc. Working on a startup also helps aspiring entrepreneurs understand how business models evolve,
how a gradual ramp-up is implemented, how a business plan has to be adjusted, how quickly things can
change and how assumptions are tested and hence, adjustments made in goals, strategy and implementation
plans.
On the other hand, working in a large company helps aspiring entrepreneurs learn about the power of processes
and systems, the challenges of working at scale, the way to handle HR issues when there are multiple layers in
an organization when, unlike a startup, you dont know your colleagues by name. Working in a large company
also teaches aspiring entrepreneurs about business focus, being goal & objective oriented and about increasing
profitability.
In effect, both environments large company and startups offer experiences that are varied and very useful
when you yourself will start your own venture.

How important is it for an entrepreneur to be passionate about the

domain?

In the context of entrepreneurship, passion is not about This is my hobby kind of passion. It is about I am
excited enough about the domain to consider committing my current life in building a business around it. I like
doing what is involved in doing the business around this concept.
Passion or rather deep interest is important because every business will go through its challenges. If an
entrepreneur is not passionate about a particular domain, and its potential to create wealth through a venture in
that domain, investors are vary that the person may give up at the first signs of serious challenges.
On the other hand, someone who is committed to a domain because of an underlying passion/interest is more
likely to stick out the rough times.

Entrepreneurship the time is now

In my view, easier availability of early-stage capital than ever before, public celebration & adulation of
entrepreneurial heroes, a well-deserved respect for entrepreneurism and also societys willingness to accept
failures in entrepreneurial ventures make it easier for younger people to consider entrepreneurship as a career.
I share below some observations that will hopefully provide some food for thought before you embark on your
entrepreneurial journey.
Enterprises have to be built around a concept that has a meaningful value proposition to your potential customers
and around which you can build a strong, sustainable business model. Entrepreneurs tend to overlook the
challenges when they are driven either by a desire to be an entrepreneur or when a concept stokes their interest.
Often, entrepreneurs assume that a business plan is to be written only when you seek venture capital or debt.
However, a business plan is nothing but your plan for your business and in order to manage your enterprise you
need to be able to create a document using some framework that helps you think through the steps you need to
take in your entrepreneurial journey.
Dont focus on the excel sheet. Focus on the business model. A 5-year excel sheet projection is just that an
excel sheet exercise. It is neither a reflection of the potential nor a reflection of your ability to meet that milestone.
However, an excel sheet exercise provides you a reference point to consider different possibilities of scale and
help you plan the intermediate steps in reaching those milestones. I.e. it is not important to detail the calculation
for a Rs.98.74 cr revenue by 2012 as it is important to be able to state We believe we can be around a Rs.75 cr
to a Rs.100 cr. enterprise by the 3rd year of operation and here is how we plan to go towards those milestones.
It is ideal to gain experience about building and managing businesses before you create your own enterprise.
Most successful entrepreneurs have built businesses after gaining significant experience across functions in
different organizations. Though often celebrated, entrepreneurial successes of people with no prior work
experience are a rarity.
One of the most common observations of investors, both domestic and foreign, is that entrepreneurs in India are
afraid of thinking big. They tend to think it is prudent to be very conservative in your projections, especially if you
have no past record to prove your scaling-up capabilities. However, unless you are creating a life-style concept, it
will be important to provide a true picture of the potential and your aspirations, especially if you are seeking
venture capital. Of course, the aspiration to scale has to be based on a validated assessment of the potential and
backed by a strong, sustainable plan to deliver on that potential.
Your ability to scale should be restricted only by your aspiration and not by capital. In todays environment, it is
far easier to raise early-stage capital than ever before. If your concept is right, if the market potential is large and
if you have the capacity and capabilities to deliver on that potential, you will find the capital to fund your dream.
On the other hand, if a number of investors reject your proposal, it should be a signal for you to consider what
aspects of the model seem to worry investors relevance of value proposition, market potential, business model
or your ability to deliver on the potential. Once you have identified the issue or issues, you need to revisit that in
your plan and see what changes you may want to make in order to address any flaws in your plan.
Just because you do not get funded does not mean it is a bad idea or your plan is wrong. Often, especially with
new concept, it is difficult for investors to take a bold step. It is therefore also important for you to find investors
who have a strong belief in the domain that you wish to be in and convince them about your ability to deliver on
that potential. If you still do not get funded and do believe it is a concept worth fighting for, you need to find
innovative ways of building a proof of concept.
Importantly, dont be a lone ranger. Connect with other entrepreneurs. Seek guidance. Ask those ahead in the
entrepreneurial journey to share their experiences. Organizations like TiE and NEN offer excellent opportunities
to network and seek mentoring from accomplished and successful entrepreneurs.
To end, I would like to clarity that entrepreneurship to my mind is not just about starting or owning an enterprise.
It is about an entrepreneurial spirit that inspires individuals to take ownership of an assignment of area of
responsibility. It does not matter whether it is in your own enterprise or whether in an organization where you
work or whether the organization is a commercial enterprise or a not-for-profit entity. Do well in whatever you
choose to do. Do it diligently, honestly, ethically and with enthusiasm and commitment. And THINK BIG.
As the advertisement of a spirits brand says Its your life, make it large.

Why startups fail?

There are several reasons why startups may fail. Some are specific to a venture, and hence would vary from
situation to situation and startup to startup. One of the most common reasons of course is poor execution or lack
of execution capabilities.
However, even with high quality teams there are some common hurdles that startups face and which can be
fatal.
While the list is not exhaustive, the following are some of the areas you might want to watch out for.
Overestimating the value of the value proposition going wrong in the assumtions
Entrepreneurs are passionate about their concepts and products/services. Sometimes this enthusiasm manifests
itself as unrealistic optimism, with overestimation of revenue projections being the most common mistake.
It is important to that you share your assumptions on conversions, revenues, repeat purchases, sales cycles, etc.
with a few people who are not directly involved with the venture and see if their views conform your enthusiasm
and optimism.
If many people do not share your optimism about revenue projections, it is prudent to budget for a lower number.
You may continue to aspiring for higher numbers as per your view, however plan and make your financials work
with lower numbers.
Changing the business model often
One of the most common mistakes entrepreneurs make is to make changes in strategy and direction too often
and without giving enough time for one strategy to be implemented. Often this change is considered as being
nimble, and is assumed to be the nature of being a startup. However, while it is possible for startups to change
direction, when you do so should be a very well debated and considered decision.
Being underfunded
Quite a few startups fail because they run out of money to continue, even if they are doing well. Underestimating
costs and overestimating revenues can sometimes leave even good ventures cash strapped.
Not having a clear plan
Often many entrepreneurs start with a broad understanding of what they plan to do, bootstrap to get started and
assume that as they grow they will figure out a way to scale. Trying to find direction when you are growing can be
dangerous. It is important to plan well ahead to ensure that you have a smoother ride as you grow.

The danger of being nimble

Smaller size of the team as well as a flatter organization allows startups to be nimble and make adjustments to
their business plans as required. Flatter org structure makes it easier to decide and implement changes fast.
However, many startups run into two the dangerous temptation of changing direction and strategy too often
Often, at the first signs of the existing strategy is not working enough, entrepreneurs tend to get carried away and
impatient and attempt too many different things without giving enough time for one direction/strategy to mature. In
many cases it is a case of throwing the baby along with the bath water.
The danger in this is that while it seems like a lot of progress and course correction, the business, and more
importantly the team, starts loosing focus and direction.
Hence, while it is possible to do course corrections, it is important that startups consider change in strategy and
direction only after adequate deliberations and after discussions with the board, advisors and other stakeholders.
i.e. A change in strategy or direction or customer segment or pricing is a serious change and should be treated
as such. Just because the stage allows you the flexibility to change direction does not mean you should use that
option enough.
Before changing strategy or direction, it is critical to evaluate what learnings have from the existing strategy and
the basis for deciding to pursue an alternate strategy