After the first week focusing on design, the second week at Innovate Delhi Entrepreneurship Academy was about building a business out of the product. To sum up the week in two equations, I’d like to use the following from Bernadette Jiwa’s blog –
Product – Meaning = Commodity
Product + Meaning = Brand
Most entrepreneurs love the product/service they build. It is their creation. But, no one wants your product. A few people might want the thing that your product does to be done, but no one wants the product. What people – co-founders, investors, users, friends of users etc – want is a story. A story to make people see your product the way you see it or any way you want them to.
Some other harsh lessons learned are:
Do not hire your friends for any other reason except that fact that they are very good at what they do. Do not hire too many people, too quickly just to feel like the CEO of a large team. Employees’ salaries are a continuous leak in a start-up’s bank-balance. Keep it minimum. Hire people who bring value to the team and fit in the team-culture. Give early hires equity. Offer them not just a job, but a dream. Also, document everything. You don’t want an early hire or a co-founder become a competitor.
A business model
Look for the answers to the following before you look for funding –
- your customers – who will use what you have to offer?
- competitive advantage – why should they use your product and not some other?
- costs – how much money do you need to spend to get your products to the users?
- revenue streams – who pays you and how much?
- break-even point – how long before you’re a profitable venture?
A lean canvas model is a representation of your business model in a single sheet of paper.
Pitching your idea
Your idea is the next big thing. But, the venture capitalist or the angel investor isn’t looking for one. They are looking for something that will start churning money soon. In the Indian scenario, it is more so. They want a tested business model, a me-too product. Just like TV shows, business models are copied from the ones successful in the US.
Also, VC’s always have a lot of entrepreneurs are vying for their time. So, you need an exceptional elevator pitch (what you would say to get a meeting if you meet a potential investor in an elevator) and a pitch deck.
The art of negotiation
Randy gave an informal talk on negotiations. After a successful negotiation, the funny thing is that both parties are happy believing that they have secured a better deal. To be able to negotiate, you need to have options. And to have many options, you should be doing something very good. Also, don’t make the grave mistake of selling yourself short. Don’t continue with a sinking deal just for the sake of time already invested in it.