Sharad Sharma’s tip for entrepreneurs: “Get the customer proposition right before getting the investor proposition right”

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“Our nation’s future depends on more people embracing entrepreneurship”

Sharad Sharma, NASSCOM’s product chair, provides a forceful argument that entrepreneurship should not be the choice to escape a tyrannical boss. Call it insight, power of thinking, or whatever you want, but people like Sharad Sharma have the ability to demystify entrepreneurship. What he says about venture capital makes real sense. Take the noise out and stay focussed on solving a customer problem. That’s where experts like Sharad Sharma who have been there, done that can help entrepreneurs.

YourStory: What are the challenges faced by entrepreneurs that you have seen in your career and what were your own challenges when you started as an entrepreneur?

Sharad Sharma: I started my entrepreneurial venture in February 2001. It was in the telecom space. What it taught me was that you should have a compelling customer proposition. In tough times, the customer is more demanding and the bar is higher.

YourStory: Was it before the 2001 meltdown?

Sharad Sharma: It was after the meltdown. We did not have starry eyes when we started because by then the meltdown had completely happened. But, we were convinced, we were solving a real problem. So it did not matter if there was a meltdown. My learning from this venture was that in tough times going only by your opinion is insufficient. What helped us thenwas that we had people from Vodafone and British Telecom on our Board and we were selling to mobile operators. Since we were solving a problem, they were able to relate to us. We met the CTOs of both these companies and they felt we had a compelling proposition and so they were willing to associate with us as Board members. Having them on board helped us validate the problem, if not the solution, and this was useful for raising venture money and building a great team. The VCs were taking a great risk in putting in their money in ventures like ours and smart people joining our team were taking a risk in their careers. In both cases, there is a need to do due diligence and your obligation, as an entrepreneur, is to make sure that you have thought through your proposition carefully.

YourStory: In one of your columns, you had talked about an intrapreneur becoming an entrepreneur…

Sharad Sharma: I started off as an intrapreneur. I must quickly tell you that story. When I joined AT&T, I had another colleague Dilip Jha and both of us reported to Krishna Tanuku, the then AT&T president in India. Krishna Tanuku asked me if I can do something on the R&D side as I came from an R&D background and he asked Dilip to do something on the IT side as Dilip came from Oracle. We were truly intrapreneurs and there was no official mandate for either Dilip or me.

So I was an intrapreneur before I cofounded Teltier. I would encourage many people to do that because if you do not know how to influence things you can’t control inside the company, where is the chance that you can do it outside the company? I am a strong believer in the proposition that you should not become an entrepreneur to escape the tyranny of a bad boss.

YourStory: But Scott Adams (creator of Dilbert cartoon) advocates that…

Sharad Sharma: Different people have different opinions. I think that is an escapist way of thinking and that is not the ideal way to look at a problem.

YourStory: What is your advice for entrepreneurs venturing into the product space? What are the exciting segments they can think of at present?

Sharad Sharma: Anything that focuses on the SMB market. The potential for IT consumption within the SMB segment is very high. Any problem you can identify and solve in that space is exciting.

The other opportunity area is the mVAS area, however, there are some challenges because the operator ecosystem is not fully developed.

There are lots of opportunities in the organised sector. Several doctor’s clinics can become organised or several kirana stores can become organised. Bringing new delivery mechanisms and new paradigms of organising firms, present very good opportunities for Indian companies.

The future IT technologies will leverage the cloud in one way or another. That is a technology and business model disruption, which is also a worthwhile business opportunity. These are the areas that come to my mind.

YourStory: Based on your experience for 20+ years in the product space, what tips would you give an entrepreneur? A start-up as well as an existing entrepreneur in the product space.

Sharad Sharma: My favourite tip would be what I learnt from a technology entrepreneur. He ended up creating the only public company in the Software As A Service space. There are four public companies and this is the only company that never raised venture capital. The company is Right Now! The entrepreneur is Greg Gianforte. He spent the first three to four months only going to potential customers and saying if this existed at this price, would you buy this? Once he had 40 people who said yes, he thought he would take a serious interest in it. Then he locked himself up in his room for 4 months to pull some alpha version together so that he could go back to those people again. I think where we miss this in a product business is anticipating a problem and solving a problem in a way that is truly scalable. It is important to do effective validation to understand the problem well. There is no substitute for interacting with a customer, knowing his or her problem, inspite of the crazy, whacky, distinctive idea you might have. My tip is that an entrepreneur should engage with that process as far as possible.

YourStory: When should the entrepreneur go for funding or do you think bootstrapping is the best way to run a business?

Sharad Sharma: I believe that the choice between bootstrapping a business or funding is partly dictated by the company business plan and partly by the personal position of the entrepreneur. Let us say you raise a million dollars. The person who has given you that money even if it is a venture fund has raised it from the limited partners of the firm. They have given a soft commitment to limited partners that they will return at least 2 million. There is a chain of soft promises but not legally binding ones you incur when you raise money from an angel investor or a VC. While it is a VC’s obligation to test whether these promises will be met, I think the real obligation is with the entrepreneur. If you think you can meet the obligation by raising a million dollars, avoid raising 3 million dollars. You should start with asking yourself the question that if you take a million dollars, can you meet the obligation of doubling that money for your investor in 7 to 10 years’ time? Do you believe that it is possible? If you don’t think this promise can be kept, avoid taking the money. That will get you into trouble.

The second is should you be the investor yourself and bootstrap the company. I think the same applies. The only difference I see is in some cases you have to do a tremendous amount of groundwork and develop confidence amongst yourself and your founding team that you have an investor proposition that is compelling. For the investor proposition to be compelling, you have get the customer proposition to be compelling.

I think sometimes it is a good idea to bootstrap till you get your customer proposition right. What I like about the Right Now! story is he never even used a PowerPoint to ask customers if they needed his product. He was based out of Montana. He did everything on the phone. He would sit on the phone and relentlessly call and, you know how hard it is to get somebody’s real time on the other side of the phone. But his job was from 8 to 5 and he would be off the phone only for half-an-hour. He would keep trying. If you can describe a complex proposition on the phone, they may not understand the solution but they know the problem best and may be able to validate that the problem you are trying to solve is meaningful. You should try to validate your problem on the bootstrap basis. Then this sets off a meaningful conversation of whether the angels should fund or VCs should fund or you yourself should self-fund.

YourStory: Any final word…

Sharad Sharma: Embrace entrepeneurship. We live in India and are not dependent on the government like in China. We are going to succeed in spite of the government. We are going to succeed because of the business world and the social world. Our nation’s future depends on more and more people embracing entrepreneurship. If you are half way there, never mind. Learn more about it and take the leap of faith to become an intrepreneur/entrepreneur.

Sharad Sharma’s tip for entrepreneurs: “Get the customer proposition right before getting the investor proposition right”

“Our nation’s future depends on more people embracing entrepreneurship”

Sharad Sharma, NASSCOM’s product chair, provides a forceful argument that entrepreneurship should not be the choice to escape a tyrannical boss. Call it insight, power of thinking, or whatever you want, but people like Sharad Sharma have the ability to demystify entrepreneurship. What he says about venture capital makes real sense. Take the noise out and stay focussed on solving a customer problem. That’s where experts like Sharad Sharma who have been there, done that can help entrepreneurs.

YourStory: What are the challenges faced by entrepreneurs that you have seen in your career and what were your own challenges when you started as an entrepreneur?

Sharad Sharma: I started my entrepreneurial venture in February 2001. It was in the telecom space. What it taught me was that you should have a compelling customer proposition. In tough times, the customer is more demanding and the bar is higher.

YourStory: Was it before the 2001 meltdown?

Sharad Sharma: It was after the meltdown. We did not have starry eyes when we started because by then the meltdown had completely happened. But, we were convinced, we were solving a real problem. So it did not matter if there was a meltdown. My learning from this venture was that in tough times going only by your opinion is insufficient. What helped us thenwas that we had people from Vodafone and British Telecom on our Board and we were selling to mobile operators. Since we were solving a problem, they were able to relate to us. We met the CTOs of both these companies and they felt we had a compelling proposition and so they were willing to associate with us as Board members. Having them on board helped us validate the problem, if not the solution, and this was useful for raising venture money and building a great team. The VCs were taking a great risk in putting in their money in ventures like ours and smart people joining our team were taking a risk in their careers. In both cases, there is a need to do due diligence and your obligation, as an entrepreneur, is to make sure that you have thought through your proposition carefully.

YourStory: In one of your columns, you had talked about an intrapreneur becoming an entrepreneur…

Sharad Sharma: I started off as an intrapreneur. I must quickly tell you that story. When I joined AT&T, I had another colleague Dilip Jha and both of us reported to Krishna Tanuku, the then AT&T president in India. Krishna Tanuku asked me if I can do something on the R&D side as I came from an R&D background and he asked Dilip to do something on the IT side as Dilip came from Oracle. We were truly intrapreneurs and there was no official mandate for either Dilip or me.

So I was an intrapreneur before I cofounded Teltier. I would encourage many people to do that because if you do not know how to influence things you can’t control inside the company, where is the chance that you can do it outside the company? I am a strong believer in the proposition that you should not become an entrepreneur to escape the tyranny of a bad boss.

YourStory: But Scott Adams (creator of Dilbert cartoon) advocates that…

Sharad Sharma: Different people have different opinions. I think that is an escapist way of thinking and that is not the ideal way to look at a problem.

YourStory: What is your advice for entrepreneurs venturing into the product space? What are the exciting segments they can think of at present?

Sharad Sharma: Anything that focuses on the SMB market. The potential for IT consumption within the SMB segment is very high. Any problem you can identify and solve in that space is exciting.

The other opportunity area is the mVAS area, however, there are some challenges because the operator ecosystem is not fully developed.

There are lots of opportunities in the organised sector. Several doctor’s clinics can become organised or several kirana stores can become organised. Bringing new delivery mechanisms and new paradigms of organising firms, present very good opportunities for Indian companies.

The future IT technologies will leverage the cloud in one way or another. That is a technology and business model disruption, which is also a worthwhile business opportunity. These are the areas that come to my mind.

YourStory: Based on your experience for 20+ years in the product space, what tips would you give an entrepreneur? A start-up as well as an existing entrepreneur in the product space.

Sharad Sharma: My favourite tip would be what I learnt from a technology entrepreneur. He ended up creating the only public company in the Software As A Service space. There are four public companies and this is the only company that never raised venture capital. The company is Right Now! The entrepreneur is Greg Gianforte. He spent the first three to four months only going to potential customers and saying if this existed at this price, would you buy this? Once he had 40 people who said yes, he thought he would take a serious interest in it. Then he locked himself up in his room for 4 months to pull some alpha version together so that he could go back to those people again. I think where we miss this in a product business is anticipating a problem and solving a problem in a way that is truly scalable. It is important to do effective validation to understand the problem well. There is no substitute for interacting with a customer, knowing his or her problem, inspite of the crazy, whacky, distinctive idea you might have. My tip is that an entrepreneur should engage with that process as far as possible.

YourStory: When should the entrepreneur go for funding or do you think bootstrapping is the best way to run a business?

Sharad Sharma: I believe that the choice between bootstrapping a business or funding is partly dictated by the company business plan and partly by the personal position of the entrepreneur. Let us say you raise a million dollars. The person who has given you that money even if it is a venture fund has raised it from the limited partners of the firm. They have given a soft commitment to limited partners that they will return at least 2 million. There is a chain of soft promises but not legally binding ones you incur when you raise money from an angel investor or a VC. While it is a VC’s obligation to test whether these promises will be met, I think the real obligation is with the entrepreneur. If you think you can meet the obligation by raising a million dollars, avoid raising 3 million dollars. You should start with asking yourself the question that if you take a million dollars, can you meet the obligation of doubling that money for your investor in 7 to 10 years’ time? Do you believe that it is possible? If you don’t think this promise can be kept, avoid taking the money. That will get you into trouble.

The second is should you be the investor yourself and bootstrap the company. I think the same applies. The only difference I see is in some cases you have to do a tremendous amount of groundwork and develop confidence amongst yourself and your founding team that you have an investor proposition that is compelling. For the investor proposition to be compelling, you have get the customer proposition to be compelling.

I think sometimes it is a good idea to bootstrap till you get your customer proposition right. What I like about the Right Now! story is he never even used a PowerPoint to ask customers if they needed his product. He was based out of Montana. He did everything on the phone. He would sit on the phone and relentlessly call and, you know how hard it is to get somebody’s real time on the other side of the phone. But his job was from 8 to 5 and he would be off the phone only for half-an-hour. He would keep trying. If you can describe a complex proposition on the phone, they may not understand the solution but they know the problem best and may be able to validate that the problem you are trying to solve is meaningful. You should try to validate your problem on the bootstrap basis. Then this sets off a meaningful conversation of whether the angels should fund or VCs should fund or you yourself should self-fund.

YourStory: Any final word…

Sharad Sharma: Embrace entrepeneurship. We live in India and are not dependent on the government like in China. We are going to succeed in spite of the government. We are going to succeed because of the business world and the social world. Our nation’s future depends on more and more people embracing entrepreneurship. If you are half way there, never mind. Learn more about it and take the leap of faith to become an intrapreneur/entrepreneur.