Barcamp Boston IV debrief
BarCamp Boston IV was held at MIT’s Stata Center this weekend. The turnout was lower than we expected given the number of registrants, but at least some of that could be attributed to the gorgeous weekend weather in the Boston area, Having said that though, close to 300 people turned out over the two-day geek fest, with a bigger turnout on Saturday than on Sunday. There were talks on several technical topics, including Web application development, geek community organization, open source frameworks and non-software hacking. There weren’t a whole lot of talks on entrepreneurship to the larger audience on Saturday, but there were a couple on Sunday. Here’s a snazzy collection of items (including tweets) about Barcamp Boston IV.
I gave a talk on Sunday titled “Playing Minesweeper with Term Sheets”, where I mentioned some of the minutiae and pitfalls entrepreneurs should watch out for when looking over a term sheet from a venture capitalist. There is much unneeded antipathy towards venture capitalists among entrepreneurs (especially the more recent ones) and I think a lot of it is because entrepreneurs aren’t aware of exactly what they are giving up in return for capital and connections. The solution to this of course is to give entrepreneurs resources to read and understand the fine print in term sheets that can dramatically alter their financial incentives. I present my (somewhat barebones) slide deck here, but feel free to write to me with any questions.
india: not one market but three
At the behest of a friend from high school, I attended the Harvard Business School India Conference this weekend for a day packed with informative panels and thought-provoking keynotes, not to mention a ton of suit-clad b-school students very uncertain of their employment prospects. One comment from a panel stuck in my mind:
India is not one market but three: it’s an Australia, wrapped in a Mexico, surrounded by an Africa.
– Venkatesh Kini, VP Marketing, Coca Cola India
I thought this statement was an especially succinct way of saying how the Indian consumer market is segmented. Kini visualized consumers in India as forming a pyramid with three layers. At the top are about 30m people with Western-level incomes, lifestyles, hopes and dreams, whom he mapped to Australia. Right below them are about 100m people who map quite well to the midmarket of Mexico: aspirational consumers with perhaps not as high an income as ‘the Australians’ but with significant aggregate spending power nonetheless. At the bottom of the pyramid are nearly 900m people whom Kini mapped to Africa: living on $2 or less a day and barely getting by. What they lack in income they make up for in sheer volume. Kini went on to say how global companies eyeing India get googly-eyed over the 1.3bn people figure without realizing that its really three distinct markets they should be targeting.
This succinct summary of the Indian consumer market no doubt has implications for how Project Tofu’s promotional materials and consumer outreach will be structured, and we found it an especially useful statement to structure our market research and development for Project Tofu. Wait a minute—’we’, ‘our’? Watch out for more on that in a general update on Project Tofu to be published in the near future!
Resentment against H-1B’s right now is a bad idea
A friend forwarded me a Bloomberg piece about the rising tide of negative sentiment against H-1B workers in the US given the current state of the economy, especially at high tech employers like Microsoft and Intel. Echoes of this piece have also been heard in the blogosphere.
The issue of H-1B workers has been a testy one for quite some time, especially in the tech industry. For those unfamiliar with the H-1B program, it’s a 6 year long temporary work authorization granted by US Citizenship and Immigration Services (CIS, formerly known as INS) to highly skilled workers whom their employer demonstrates to be qualified for a position. The employer undertakes to pay H-1B workers a prevailing wage and further asserts that they are being hired because no qualified US citizen was found for the job after reasonable recruiting efforts, such as posting it on publicly accessible job boards. A US business may choose to apply for a green card for an H-1B worker during the term of their employment. Barring certain occupations, a maximum of 85,000 new H-1B visas can be issued each year.
There are just as many misconceptions about the H-1B program as abuses of it by unscrupulous US employers. In the court of public opinion, H-1B workers are classed along with qualified offshore labor pools; both are viewed as undermining the US job market because H-1B workers are supposedly willing to settle for a lower salary in return for the chance to build a life in the US. H-1B workers are not paid under the market rate; the requirement of an employer to demonstrate their ability to pay prevailing wage guards against that. H-1B visas, however, tie a worker to one or more employers specifically authorized by the CIS. This lack of free agency, coupled with the fact that there is often a green card application riding on the job means that H-1B workers can be coerced into settling for less by unscrupulous employers.
I am currently an H-1B worker myself, and thankfully I’ve always been treated well by my employers with regard to the H-1B program. The most egregious abuses of the program allegedly come from Indian employers, who contingently apply for vast portions of the H-1B visa quota without intending to actually fill those positions with a regular US-based worker. Qualified IT workers from India are rotated in and out of the US on these approvals for short stints that can be used to pad their resumes.
It’s unfortunate that the popular discourse has conflated outsourcing, the H-1B program and immigration of the legal and illegal varieties. No doubt it’s an emotionally charged topic in the US especially when viewed against the backdrop of the wane of its hitherto unquestioned global influence. To take a protectionist stance against skilled immigration programs like the H-1B, however, would be suicidal for the US. H-1B visas are not just for unscrupulous body shops; they are also used to advance fundamental research by companies like Microsoft, who is one of the largest beneficiaries of the H-1B program.
Granted that the H-1B program does suffer its share of abuses, but it also helps employ talented, skilled labor that advances the state of the art in fundamental research and brings innovative products to market in a bunch of industries. With a widely lamented pre-university education system and all-round declines in Science, Technology, Engineering and Mathematics (STEM) enrollment from citizens, protectionist attitudes against immigration are just what the US needs to hammer in yet another nail into the coffin where its future will peacefully rest.
How I Changed Careers (Twice) And Survived
Much career advice I have come across works from the assumption that career changes happen largely in response to burnout, personal epiphanies or major life events. Recent radical changes in how knowledge work is done today mean that career changes must become more frequent. In fact, if anything, career changes can be a significant part of one’s personal development.
I had wanted to be a software engineer since I was 15, and my college years at MIT only intensified this resolve. I looked up to my particularly talented classmates, who largely aspired to be brilliant engineers who stood out among their peers. I was also part of an MIT subculture that cultivated a healthy disdain for smarmy ‘business-y’ types, who went after plum consulting and investment banking jobs. So, when I graduated from MIT with a computer science degree, my heart was set on being a software engineer. The problem is, my heart was wrong. It wasn’t that I was a bad engineer; in fact, I had a decent aptitude for the job. But I quickly realized that my heart wasn’t in it.
As someone who views his job not just as the source of a paycheck but as a vocation, I couldn’t have tolerated that state of affairs for very long. I embarked upon a process of soul-searching that led me to venture capital, the career that I am in today. This is my third career and fourth job since graduating from college, but the first one in which I can envision myself ten years down the road. I’ve written at some length about why I am attracted by venture capital. Having been through two career transitions, I figured I’d set down some of the how—tips that helped me through them for the benefit of my readers.
- Know what you want. This part is by far the most important step in motivating a career change, or even a job change. It is, however, easier said than done. For the better part of a year, I went through a process of identifying exactly what it is I value in my ideal job. You too must ask yourself the kinds of things that would attract you to a job and keep you there: work environment, working style, lifestyle, compensation, future job options, location or any other meaningful indicator. Prioritize them and write them down to begin to form a picture of what attributes your ideal job would have. A career change is a major transition rife with moments of indecision, especially if you’re choosing among multiple career options. Doing this work up front is a huge help because it helps ground your thinking later.
- Do your homework. Once you know what you want, it’s a lot easier to actually do the requisite research and groundwork. The next step is converting the values you identified above into functional career areas by function and industry (e.g. marketing for tech companies). LinkedIn is a wonderful tool to reach out to folks whose careers you are intrigued by; if approached nicely, nearly everyone is willing to spend a few minutes relating their career story and giving you tips on breaking into their field. If you feel strange using LinkedIn, go to meetups in career areas you are considering—after all, the attendees at a meetup are there to be social. Eventually, you will come up with a list of potential job titles and descriptions you want to interview for. Look at job postings for your target job titles on job sites and get familiar with the target skill set and jargon your prospective employers use in the ad. If need be, polish your knowledge in the target job’s skill set by reading books, taking courses and finding mentors already in the field.
- Emphasize the positive. A chronological resume can be an impediment to career changers because it emphasizes a job timeline rather than a skills profile. The first step is to pick apart your chronological resume and distill it into a set of skills matched to the target skill set. In addition, construct a list of skills you have accumulated at your current job, independent of whether they apply to the target job. Then construct a functional resume, which emphasizes your skills profile for the target career; you may include a brief employment timeline to place your skills in context of the jobs at which you acquired them. Construct a crisp one-minute ‘elevator pitch’ about yourself that emphasizes your strengths and what you can do for an employer in a target industry. When an employer invites you for a phone or in-person interview, use this pitch to introduce yourself. Employers are not inherently averse to hiring career changers, but they are taking a fair amount of risk when they do so; distilling your thought process into an elevator pitch signals to them that you have done the legwork and thought seriously about your target career. During the interview, be honest about what you don’t know as a career changer, but emphasize the unique perspective you can bring to your target job given your background and current skills.
- Don’t forget the personal touch. Job hunting in the Internet era has sadly become a joyless numbers game. Candidates submit resumes to job postings without really reading them, and employers consequently have to deal with a barrage of potentially irrelevant resumes. Coping mechanisms for potential employers may include tactics like keyword matching, but if you have done your homework properly, you should be able to overcome these filters. The act of hiring ultimately is highly personal though and is very dependent on chemistry. Take advantage of this fact to stand out among the competition, even those already in the target career. Plus, it’s a lot of fun to actually try and build bridges with real people rather than use resumes and job descriptions as proxies. When contemplating my first career change, I dropped off my resume in person at the office building’s front desk, requesting an informational interview with Nick, who would later be my manager. I happened to find out from Nick’s blog that he likes to cook, so I included a couple of seasonal recipes in the resume envelope I dropped off. Resumes and recipes—a little incongruous right? But it highlighted my application and showed that I wanted to make a personal connection. Likewise, I send a small box of chocolates to every recruiter through whom I find a job.
The job market is going through some convulsions right now and employers are hesitant to hire people from their field, let alone career changers. Even in the worst job market, however, good people who know what they want are likely to have less trouble than average in finding the job of their dreams. So, good luck!
Venturing into Capitalism
A while ago, on my old(er) blog, I wrote a post called Ten Things I Miss About Cambridge, in which I wax nostalgic about all the things I missed since I moved to New York from Cambridge, MA, the town in which I went to college. I love the energy and intensity of New York and I highly suggest that everyone spend at least a couple of years living in the area if they have the chance, for an experience they will not find in the rest of the US. My New York experience, however, comes to a close for now, as I move (back) to the Boston area in January and begin a new job as a junior investment professional at Longworth Venture Partners.
One of the best pieces of advice I received from my high school principal was to always think of what’s next, be it in my life, my career or any other of my pursuits. Onescore and four months ago, I switched careers from being a software developer on Wall Street and became an enterprise software industry analyst at The 451 Group. When I became an industry analyst, I had way too little operational experience that would inform my career in the field effectively. After all, there are few things worse than an uninformed cynic. As luck would have it, I happened to break into a unique firm like The 451 Group, which is truly doing some great work in the industry analyst industry with its eye on emerging technologies, startups and its connections into the investor community. After getting my bearings in my new role as an analyst, it dawned on me that the next step in my career, which would give me additional operational experience, should be either at a technology vendor or a technology investor.
My role at The 451 Group has by far been my favorite job to date for three big reasons: the wonderful people I work with, the kind of work I do and the sheer amount I have learned about how the high technology industry works. I’ve always tried to be around people smarter than me so that I can learn from them and it has truly been an honor to work with my fellow analysts at The 451 Group. My work as an industry analyst fits my preferred working style very well–short, well-defined, intensive projects with considerable variety. I’ve personally come to value breadth of knowledge over depth of knowledge in any given domain because I figure I can always delve deep into a specific topic (or draw upon the specialized knowledge of smart people) if need be. For all these exact reasons, a career forward as a tech investor rather than at a tech vendor seemed the best step to take.
Longworth Venture Partners is an early-stage technology venture capital firm, whose past successes have included Softricity and Constant Contact. The firm closed its third fund of $180m this summer and is actively looking to invest in infrastructure software, mobile/wireless and online content companies. The firm is big enough to have healthy deal flow but small enough that I’ll have much to learn about the venture investing process.
Venture capital is a line of work I’ve always eyed with keen interest and I’m delighted and thankful to receive this opportunity. As glamorous as venture capital may seem though, it is extraordinarily hard to identify what exactly makes one an effective venture investor. Even if I find that I don’t have that secret sauce, this path opens up several opportunities, be it in entrepreneurial circles, senior operating roles or investment circles.
I’ll miss New York and all my friends and associates here. I know the New York startup community has a lot of promise from my own interactions with it. Longworth is active in New York and other East Coast entrepreneurial communities, so I’m sure I will be no stranger to New York. If you are an entrepreneur and would like to bounce ideas off me, you know where to reach me.
On the brighter side, I look forward to reexperiencing the Boston area (this time not as a broke college student), reveling in all the things I now miss about Cambridge, and perhaps discovering other things to miss and write about in future posts. So, here’s to venturing into capitalism!
The Four Hour Work Week
I recently read the Four Hour Work Week by Timothy Ferriss. The book lays out the case for ‘lifestyle design’, where you, me and Joe the Plumber can become financially independent and use our time to do the things we really want to do–like ballroom dancing, kickboxing, meaningful charity work or otherwise become a Renaissance Man–rather than being chained to a desk in the most fruitful years of our lives. If you detect a faint note of disdain in my description, you are not too far off because that’s how I initially greeted the book and how it was marketed.
The initial chapters of the book reminded me of Aleksey Vayner and of tons of spam that poses as advice on how to become a PUA. If you’re willing to overlook the almost-intentional hokeyness of the early chapters, you can walk away from the book with several thought-provoking ideas on simplicity, the value of time and the virtue of being more effective by working smarter rather than harder.
More than anything else, the book emphasizes the value of time, once the time-money trade off shifts in favor of time. Ferriss ruthlessly condemns conventional wisdom, which advises people to defer enjoyment until they have retired, at which point the change of pace is a big shock and might lead to regrets and aimless time-wasting anyway. He lays out some techniques that will help readers become fully detached and mobile from one’s work; to become financially secure in ways that will help them accomplish their dreams; to trim the fat of unnecessary possessions, ties and expectations from their lives and to take advantage of labor arbitrage to aggressively outsource mundane tasks to others. The last theme especially might give some food for thought to entrepreneurs running Atomized Enterprises.
Above all, Ferriss emphasizes active living, i.e. imbuing everything you do with intentionality, self-awareness and explicit volition. The man’s effort is commendable–what starts out sounding like a tacky, get-rich-quick book winds down sounding like it came out of a Zen text.
It’s good for Tim that he has been in sales roles for much of his life, because those roles can afford a reasonable amount of mobility. At my current workplace, several of the top-performing salespeople are perfectly fine working out of a home-office so long as they are ’smiling and dialing’ enough. As part of the Generation Y ethos, I hope for a flexible work environment, varied activities and travel in my career, but I still expect to spend several more years in a traditional office environment for the kind of work I want to do. But Ferriss’ exhortations on the value of time–the fierce urgency of now if you will–are definitely something to keep in mind as I strive to live a fulfilling life.
I’ve started my next book, Getting Things Done by David Allen, which takes a whole different approach to time management and efficiency. There is a huge online cult following for the book already, but I might report back with some of my own thoughts.
Five Things About India That Blew My Mind
Last week, I attended a event organized by TiE on US-India entrepreneurship (the same one I talked about in my other post) and came home with my mind racing. Of the many great speakers at this event, one was Navjot Singh, a Partner at McKinsey&Co. From his talk and over the course of the evening, I learned the following five things about India that blew my mind:
- According to the McKinsey Global Institute, private consumption in India is set to grow 4.1X in the period from 2005-2025.
- In 2012, India is set to overtake China as the fastest growing global economy.
- By 2010, private equity investment in India is set to reach $20bn (A PE Hub report states that VCs have pumped $2.3bn into India so far this year).
- 40 percent of produce grown in India never gets consumed, due to poor infrastructure and inadequate food preservation.
- Healthcare in India will present a $20bn market opportunity by 2015, including fundamental research, drug development and patient care.
India has made a name for itself in IT services so far, but as the economy and old ways of life slowly transform, the enormity and sheer variety of opportunities in the years to come should boggle anybody’s mind.
Timeless advice for entrepreneurs
Yesterday, I attended a mini-conference at Princeton University, which explored entrepreneurship opportunities in the India-US corridor. TiE, the organizers of the event, had assembled an extraordinary roster of speakers, all of whom were engaging and made many thought-provoking points. One of the speakers was Ken Morse, the Director of the MIT Entrepreneurship Center, who was especially entertaining. One of his quips:
As an entrepreneur, you have to work 24 hours a day, but you get to choose which 24.
Almost simultaneously, the doom and gloom from the convulsions of the financial sector has found its way to the Silicon Valley crowd. Warnings from investment stalwarts such as Sequoia Capital and Ron Conway have almost single-handedly ended the exuberant atmosphere among the entrepreneurial set. Several VC firms have held come-to-Jesus meetings evaluating the impact of the credit crisis on the health of their portfolios. No doubt, it’s never a bad time to be an entrepreneur. Now is especially a good time for those just starting out to hunker down and build a company that will be in the right place when the economic headwinds turn. In his talk, Ken Morse gave some advice that applies to entrepreneurs no matter what the economic climate is like:
- Business people are essential. Ken said 80 percent of startups consisting only of technical founders (the ‘geeks’) fail. Conceiving an idea is less than half the battle. Assuming competent execution of the idea, getting the word out and selling to customers are a lot more important to the success of any venture. Ken exhorted entrepreneurs not to view salespeople as ‘lower life forms’.
- CFIMITYM. Cash Flow Is More Important Than Your Mother. Even if you are not the business person in your venture and even if you are lucky enough to be well-funded, get to know how your business model generates recurring revenue at a basic level. Make basic financial projections for your own reference that will guide your thinking for several months ahead.
- Selling skills are important. Ken said there is a real shortage of sales skills among entrepreneurs. By sales skills, we are not necessarily referring to dealing with prospective and current customers. Selling people on ideas and strategies is just as important.
- Do the homework. Regardless of whether you’re a lone business-minded founder looking for your technical soulmate/co-founder or vice-versa, you have to do the early market development yourself. Validate your ideas early by talking to prospective customers. Defining the scope of what you will do with real outside input is an experience that will refine your idea and potentially lead to new directions.
- Customers are the best source of funding. Rather than chase 4F (Friends, Family, Founders and Fools), angel or venture capital money, see if you can’t get customers to fund your development. Customers provide validation to your business model and can act as external champions of your product or service. What’s more, in return for their money they just want their problem solved and pain points removed; they don’t want any of your equity.
Ken made the above points alongside a great presentation detailing success factors for an entrepreneurial venture. Perhaps these success factors will change even as the nature of entrepreneurship itself is changing. But the points of advice above are truly timeless.
Breakfast with Scott McNEaly: keeping it lightweight
- Buy spot market offerings. As much as possible, buy products and services at going short-term rates, even if it means you end up paying a premium for not agreeing to sign on for a longer term. McNealy said that things change too quickly in our world and that locking in a profitable long-term contract rate might prove to be an impedance down the road. He said that signing on more resellers rather than more salespeople during the dot-com era would have been one example of this principle at work; he added that Sun should have preferentially grown its reseller network over its sales force.
- Minimize fixed costs and overhead. As a parallel to a supposed Japanese business maxim "all inventory is bad", McNealy said "headcount is bad". He exhorted entrepreneurs to keep fixed costs low and concentrate exclusively on their startup’s unique value proposition where they differentiate themselves. In most build vs buy decisions, entrepreneurs should only build that which will enable them to erect barriers to competitive entry by other players.
- Get someone to think you’re crazy. McNealy said that the mark of a good strategy is someone thinking that its creator is crazy. Eliciting a vehemently skeptical reaction means that there is a controversy somewhere in the business plan, which in turn is an opportunity for the entrepreneur to differentiate themselves and their startup.
- Create barriers to competitive entry. McNealy emphasized the importance of creating unique intellectual property (IP) such as patents and trademarks that will inhibit competitive entry into an entrepreneur’s market niche. He was of the opinion that a portfolio of this kind should not be used predatorily but that it is nonetheless a good defensive measure. Sounds like the IP version of the Reaganesque maxim "Speak softly but carry a big stick".
I was struck by the extent to which McNealy’s advice resonates with the themes of Atomized Enterprises that we have discussed at great length on this blog. McNealy does not perhaps espouse atomization to the same extent; for instance there was limited commentary on outsourcing or cloud computing. In one instance, he even wondered why management consultants exist at all because an enterprise should never ‘outsource thinking’.
- Nonetheless, the idea of keeping overheads and fixed costs low is an important idea I took away from the breakfast. Do you think enterprises can still create value while outsourcing the effort behind core value creation (rather than the ideation behind core value creation)? Join the discussion in the comments below!
in|vest: Alok Mittal, Canaan Partners
Name: Alok Mittal
Location: New Delhi
Bio: Alok Mittal is Managing Director with Canaan Partners India. Alok focuses on building companies in the fast-growing wireless, technology and Internet domains.
A successful entrepreneur and founding member of Band of Angels India, Alok also seeks to foster the development of new global technologies in India. He led the technology practice at Baring Private Equity Partners, India, where he focused on IT products and services, BPO, Internet and Telecom. Prior to Baring, Alok was Co-founder of JobsAhead.com, a leading web-based recruitment business. Alok was instrumental in the acquisition of JobsAhead by Monster.com, the global leader in online recruitment. He also brings strong Telecom experience to Canaan having worked for Hughes Software Systems, the premium provider of telecom software services and systems in India. He serves on the Board of Directors of Bharat Matrimony, iYogi and Cellcast. He holds a Bachelors degree in Computer Science and Engineering from the Indian Institute of Technology, Delhi and a Masters degree in Computer Science from the University of California, Berkeley.
Have you invested in startups meant for the Indian market before? Which ones?
Canaan’s investments targeted at Indian market are Bharatmatrimony, Techtribe and Cellcast. The other companies with significant India component are e4e, Unitedlex and iYogi.
What sectors or investment themes look most promising to you in the Indian market?
We are looking to broadly invest in early stage technology ventures including internet, mobile applications, software products, offshore services, transaction processing and so on.
What excites you most about your sector of choice in the context of India?
High growth rate of consumer markets, increasing rate of technology adoption, and vibrancy of venture-backed startups are the key factors that excite us about India. Our focus on technology is derived from our extensive experience in this segment globally.
What is one thing that Indian entrepreneurs often overlook when deciding to start a venture?
A key element that entrepreneurs would do well to factor in is the element of differentiation - not just at a feature level, but how are they able to bring significant benefits to existing and competitive offerings - especially benefits that the customer may be willing to pay for incrementally.
What are your personal interests?
My personal interests include reading (a whole bunch of diverse non-fiction), music, driving/riding. I am a moderate gadget user, with the regular ipod, palm, laptop stuff.
Connect: http://www.canaan.com, http://www.venturewoods.org, http://www.indianangelnetwork.com
[To learn more about in|vest, read the overview page and this blog post. If you are an investor with an interest in India and would like to participate in in|vest, please read the participate page as well.]
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