The Silicon Valley Of Your Dreams
Starting your own ﬁrm is a very diﬃcult job; both emotionally and physically. The given list is a very good starting point to build the Silicon Valley of your dreams!
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The decision to take the ultimate plunge to build your own ﬁrm is never an easy one. The decision can be spurred in a moment of realising a path-breaking idea or an intense desire for individual freedom driven by a stiﬂing corporate culture. Whatever the reason, the path is akin to a game of thorns where the entire world seems to queue up against you! The article intends to serve as a primer for aspiring entrepreneurs to help them navigate through the initial days before the real battle begins!
Build a great product at the right place, time and cost! It is a no-brainer that you need to have a potential idea that solves a genuine pain point for end consumers. The pain point is termed genuine if at least a million consumers feel it (not just a few consumers on 80 feet road, Koramangala, Bangalore) and are ready to pay for it. By paying, it implies an amount that makes unit economics positive. While this idea of yours is getting prototyped, it is advisable to not rock your existing job or source of stable cash ﬂow. The disruption to your steady cash ﬂow is advisable only when your great idea has successfully been piloted.
Nothing makes the world go around like money!
The initial capital to start your venture, termed seed capital, is often generated from your own pocket or from well-wishers. Once you are able to show a certain traction in consumer usage scale, aspiring entrepreneurs typically approach venture capitals for further funding or additional funding. Each subsequent round of funding is designated by a letter in the alphabet series (Series A, B, C, D, etc). For instance, Flipkart has had over 15 rounds of ﬁnancing having raised in excess of $ 7 bn. During each of these stages in funding, venture capital investors assess the potential valuation of the company through a due-diligence process. To witness a dramatic version of this process, you might want to watch a few episodes of the hit sitcom ‘Shark Tank’. Although securing a funding is considered the gold standard for an aspiring entrepreneur, as your grandparents would advice, it is best advisable to attempting to scale up with your own limited capital without relinquishing control.
It is all in the name!
The importance of this step can never be adequately emphasised. A good catchy name for your start-up is necessary to resonate with end consumers and investors. The general guideline for having an attractive name includes having around 2-3 syllables (e.g. Google, Amazon, Flipkart) and not more than that (avoid Dhronacharya Pratap Singh Associates & Company). Needless to say, any name that sounds young (e.g. Apple) is better an older sounding name. The critical step is to check if someone else is using the desired name and blocking it if it is available. This step can be accomplished on the MCA 21 (Ministry of Company Aﬀairs) website.
Stay fully involved, stay foolish!
Although it is important to stay fully committed and passionate to your startup, it is sensible to be legally sound and protected. The business structure of your startup needs to be agreed upon at the very start to avoid unforeseen future debacles. The most primitive version is the sole proprietorship model where you are the eventual owner with every revenue and cost item hitting your personal wealth. As a consequence, you are individually liable for all losses to your ﬁrm. This structure is advisable for free-lancers who do not have signiﬁcant cost liabilities while operating your businesses. A safer version of a business structure, termed by some as the greatest invention of the previous century, is the limited liability partnership model. As the name suggests, the model guarantees you access to the entire revenue and proﬁts while limiting your losses to the invested capital. As a result, your personal wealth that is not invested in your company is deemed safe.
Get a 21st century garage space to start work!
While entrepreneurs in the previous century were famous for working in their garages before making it big, the 21st century has made it easier for aspiring entrepreneurs to get a physical space. The ever mushrooming co-working spaces (e.g. WeWork, Innov8), with desks and rooms for rent with all other services taken care of (e.g. internet, cleaning, security, cafeteria, parking), are an extremely attractive proposition for aspiring entrepreneurs. The cost of such services is fairly reasonable with an individual desk costing between 8,000 - 12,000 a month while a dedicated meeting room costs between 15,000 - 20,000 a month.
The paperwork is not as messy but necessary!
Registering your company is a necessary evil. It involves obtaining a DIN (director identiﬁcation number), ﬁling the certiﬁcate of incorporation at the Ministry of Company aﬀairs website, obtaining a permanent account number, tax account number, registering for GST, blocking the company name among other steps. In case a patent is involved for your product, it involves a few more days. To be reasonably practical, the entire process of registering your start up can take around 3 weeks including the time you require to get the documents ready!
Make your friends on social media jealous!
Even before you have decided to take the plunge and register your ﬁrm, a social media presence to test the concept and user interest can be of great help. In terms of eﬀectiveness of media; Facebook is passé while Instagram is the new king of commerce. Not to forget, leveraging LinkedIn for understanding end user traction is picking up! More than product testing, a following of at least 10,000 people on your product pages is a handy start. To pay for followers or likes is not advisable; they rarely end up subscribing to your product. An organic following is always advisable in the beginning before driving up an audience by paying for them.
Choose the right backbone in form of the technical infrastructure!
Given most contemporary startups are technology enabled platforms, employing the right technical infrastructure can be critical in the beginning. Technical infrastructure is required to store critical user data on cloud servers, generating user behaviour insights through an analytical engine, sending promotional e-mails to end users or employing the latest security ﬁrewalls to avoid breach of data (remember Facebook?). While software as a service (SaaS) based on a pay per use model is provided by many vendors, Amazon Web Services (AWS) is a great starting point for startups of any size.
Soft infrastructure, in terms of people, is equally important! Working at a startup can be very unglamorous in the beginning You are everything from the CEO to the chaprasi. However, it is important to think of your core team as you plan to start your company. Key considerations for getting members to join your core team are based on personal chemistry and only then complementarity of skill sets. In case you are not sure of the importance of this step, would request you to watch the movie ‘Social Network’ based on the initial days of Facebook.
Professional and social support is the most important step in the process! Given starting your own venture is a once in a lifetime and a very demanding process, reaching out to professionals who have done it before might be of great help. There are numerous resources available online to assist aspiring entrepreneurs in their day-to-day transactions. Biographies of leading entrepreneurs (e.g. The Everything Store (Amazon), Steve Jobs (Apple)) is a great account of the emotional and mental struggles an entrepreneur goes through. In addition, there are incubators with experts that provide live assistance (e.g. NSRCEL in IIM Bangalore). Assistance provided from incubators can range from professional coaching, providing physical space to contacts of key customers or ﬁnanciers. What is equally important is a strong social support for an aspiring entrepreneur. The journey of starting your own company is gruelling and lonely, support from family and friends is absolutely necessary.
In conclusion, as exhilarating as it may sound, starting your own ﬁrm is a very diﬃcult job; both emotionally and physically. The above list is a very good starting point to build the Silicon Valley of your dreams!
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.