Posts filed under 'India'
I found myself sitting next to a young chap on my flight back to San Fransisco. He was from Bangalore and was in the US for a couple of weeks of work. It turns out he needed a ride to San Jose and I offered to drop him off on my way home to Los Gatos.
We were having a polite talk about benefits and salary offered in India. When this person asks me out of the blue: Do you know what an MBA is? I replied, “what do you mean”. He replied, “Married but Available”.
I was somewhat taken aback. But asked him what the context was. He said well it was so much easier to go out with girls in Bangalore than it was in the US. And he went on and on. Now I am not sure if he was trying to impress me (would wonder why?) or this is just how it is. There is a large single population in Bangalore, which live away from home by themselves, have a lot of disposable income.
What do you think?
February 26th, 2007
Vijay Anand (the force behind Proto) posted this note from a Demo Conference Veteran to help people have the maximum impact during their product presentations ( You can get the original posting from here).
———- Forwarded message ———-
From: Shel Israel
Date: Jan 14, 2007 9:43 PM
Subject: RE: Proto.in Presentation Tips
To: Vijay Anand
1. Be humble but proud. Remember the star of your presentation is the product not you. Your audience wants to see the technology. Spend as much time showing it as possible.
2. It is far more memorable to make one point very well, then to make several points.
3. The objective of a good presentation is to get the people who matter most in the audience to want to come up to you after your talk and say, “tell me more.”
4. Remember to always play nice. Your worst competitor in today’s conference is tomorrow’s business partner, employer or employee.
5. Speaking without hype, in a style that is authentic and in the tones you would use when meeting a new business partner.
6. If there are potential investors in the audience ignore them. They are going to follow the buzz you make with the technologists in the audience. Focus on the technologists.
7. If you are a star of the conference, remember that you just did well at one event and on one day. If you do poorly remember that you just had a bad day and the world has not collapsed. In either case, you will have learned a very valuable lesson to take with you moving forward.
8. You, your product and your company are being judged at every minute during the conference, not just when you are speaking from the dais. The conversations and networking are the most important part of any business networking event.
9. Do not exaggerate what your product can do. Do not be overly optimistic about when it will be ready.
10. Make it clear that you want as many partners as you can get.
–~–~———~–~—-~————~——-~–~—-~
January 14th, 2007
Companies employed 450,000 workers, generated $52B in sales in 2005
By Rachel Konrad
Updated: 7:08 p.m. PT Jan 3, 2007
SAN FRANCISCO – Foreign-born entrepreneurs were behind one in four U.S. technology startups over the past decade, according to a study to be published Thursday.
Read the article at MSNBC.
January 4th, 2007
1. Outsourcing will reduce cost of my product release
At some point or another in the life of a startup, the question gets asked: why dont you outsource your development to India (or China)? And ofcourse everyone on the board talks about how this would save money and reduce the burn rate.
These days my advice to most companies is don’t do it. For most companies the length of the development cycle more than doubles when they outsource, because of the communication overhead and the distance eliminating hallway conversations and face to face interaction. So even if you reduce your engineering burn to 1/3 (which is roughly what it works out to be), the total cost of the product is increase in cycle time * burn = only 2/3rd of the original cost.
In addition it also slows you down, which coupled with the fact that you are spending some money on other functions also, may cause the total cost over a product cycle to achieve the same results be higher than without outsourcing.
2. We will do joint projects
One of the most common pitfalls is people say lets get a few people at a outsourcing vendor to be part of this project. This ican be a fatal mistake. Defining the boundary between the team in India and US is a very key part of ensuring success. The boundary should be drawn to minimize communication and dependepency: crossing the 12 hour time difference introduces inefficiencies. The only cases where it seems to work is where the Project Manager is really good and extremely detail oriented.
3. Microsoft, IBM are moving thousands of jobs, it should work for my company also
The dynamics of outsourcing are changing rapidly. I heard recently there was a rally in Bangalore to protest against jobs moving to China from Bangalore. The reality is that costs in India have risen substantially (as happened in Israel a decade ago). Real-estate today costs more in Bangalore than Silicon Valley, so does electricity. Good people cost about 60,000 USD. — which is not much different than North Carolina.
For companies like Microsoft and IBM it makes a lot of sense as their cost of employee in the US is about 200,000 – 300,000 USD per year, because there is usally a high overhead in addition to salaries in big companies.
But for a startup, where the overhead is minimal the equation has changed dramatically over the last few years.
4. It is just an engineering thing
There are companies with 50-100 people in India, where the CEO has never been to India. Even if these people are employees of some outsourcer, this simply boggles my mind. If you are going to outsource especially in software, these people are part of your future. They need to see the executive team often and require communication about the company as much as the folks in the US. If you are not prepared to travel as a CEO don’t outsource.
5. Let’s try it for six months
Outsourcing is a long term investment. If you go in with a six month philosophy it will become a self-fulfilling failure. It is the wrong thing to do, when you are out of cash to extend your runway. It is a long term thing, which requires investment of time and energy to succeed.
December 13th, 2006
The Demo Conference (http://www.demo.com) is a great place to launch a product in the US. Vijay Anand and others have launched Proto (http://www.proto.in) with a similar concept for India. This is a fanastic thing for the Indian startup eco-system.
The first conference is to be held Jan 20-21, 2007.
December 9th, 2006
I arrived in the US as a graduate student in the Computer Science department at Stanford in 1993. And as part of being a PhD student, had to do my share of being a teaching assistant. Everyone at Stanford at that time was talking about companies … I would rarely find people talking about their grades. Actually I just assumed that this was normal in the US.
The contrast became very dramatic when a few years later I ended up in Cornell and there was no talk about companies … but everyone talked about grades. Actually most of the undergrad population had friends who were in MIT and their constant effort was to show that they are better than their MIT friends ….
Since then several years have passed by and I had a similar experience in Bangalore. I was sitting in Bangalore club with some of my mentor-partner friends and listens to enterprenuers pitching their ideas. And the contrast was striking … in the valley most peoples ideas start with the PC, Storage…, now the web … in Bangalore most ideas start with phone, phone and phone. When people want to do a company, they think phone. The eco-system is “early-adopter” mentality, Bharti, Reliance and others are open to launching 3rd party applications on a revenue sharing basis.
Again the contrast was sharp and stark.
December 5th, 2006
From: Rosen Sharma
Sent: Sunday, December 03, 2006 9:04 PM
To: ‘jboudreau@mercurynews.com’
Subject: RE: India VC 2.0
John,
Read your article about India VC. I want to thank you for increasing the awareness of what is happening in India. Please don’t take the following as a criticism, but more as an informed opinion.
Everyone who goes to Bangalore for the first time does the same thing: they go an meet the Silicon Valley bank officials, meet Sridhar Mitta (with TIE) and a couple of VCs. While for the first time visitor this gives them some perspective but it is a one-sided point of view.
I think almost all US-connected firms with India funds are completely screwed up. Their structure is determined by the needs of the partners in the fund rather than the reality of the environment
Most funds in the US are built on 2% management fee and a 20% carry on the profits. So if a fund is $100M the management fee will be 2M and the carry is on the profits earned. (NEA is one exception to this – it is cost based – which allows them to raise very large funds.) On an average a US general partner in a fund makes $400K-$1M in salary per year. Thus a $100M fund can have 3-4 partners and the rest for expenses. Most US funds for India have the same or similar economics.
…
So we have funds which have USD 100M-150M under management. Such a fund can support 3 GPs. A fund is typically invested over 4 years in the US (there are several around which have a 3 yr investment cycle). If we assume the same for India, this means that 25M a year is being invested. You would invest 5M/company that’s 5 companies a year among 3 GPs which is reasonable. But consider that you can invest 2M/company, that’s 12 companies a year … that’s a bit much.
Now let me ask the key question: what is invested in each company is determined by what the company needs or what the VC needs to invest to make their model work? Why are the US-connected Indian VC’s more keen in investing in companies which can gobble up 5-10M? Why are they investing in real-estate and hotel companies? Most companies in India need an initial investment of less than 1M.
This is one of the problems: the US-India funds are based on the needs of the individuals and the funds rather than the needs of the companies.
There are several other problems with the models which exist today. Most companies over their life time in the US end up using $25M+ of cash, and companies in the India are not going to be very different. The eco-system in India today can’t fund individual companies to that extent (round C, D, E). You have people like Warburg who will do later rounds, but they only do certain kinds of deals. So if I do round A and B in India there is no bridge to US for getting the later rounds done. Infact it is going to be a struggle. In addition, most of the people who would be GP in an India fund, would not be on equal footing with GP’s in the US (not from a compensation perspective), but from a relationship, clout perspective. So if you are a GP in India and your company needs more money, can you swing the partnership into funding a tough situation: unlikely.
My opinion is that it is not the entrepreneurs in India which need to be frugal, it is the VCs. They need to have an economic models which meet reality of the market, and a cost basis which makes it possible. We have a long way to go.
Rosen Sharma
–
President & CEO
Solidcore Systems
www.solidcore.com
December 3rd, 2006
