Sunday, June 28, 2009
Farewell Blogger! Here I come Wordpress
I apologize to all my followers to do this to you. I am moving my blog to Wordpress. I know. I know. I should have researched the blogging platforms a little more before I started writing one. I believe the choice is very similar to Mac Vs PCs and I think Blogger is like the PC and Wordpress is like the Mac. I hate PCs! My new blog is at http://indianstartupgyaan.wordpress.com/
Should you fund your product Startup by performing Services?
What prompted me to write on this topic is an email from one of the followers of my blog (completely anonymized) wrote to me seeking advice:
"Dear Abhinash,
I am XXX
I currently run my co-founded startup YYY with a team of 7 people.
The urge to email you started after reading your thoughts at http://randommusingsofabinash.blogspot.com/2009/06/building-kick-ass-team-part-i.html ! Pretty useful insights. However there are few challenges that we are facing and would love to have your suggestions over it.
We are basically a 6 months old startup who is working on social media strategies and as a web dev workshop, originally started with a vision of being a primarily product company we have shrunk to become a services company and see ourself under a deadlock . We need money to run our operations and thus need to make quick money. For quick money , We need to work. However , at the end of the month we end up spending all our time on outsourced projects and thus come in a deadlock of earning and spending.
However, we are doing good and are very positive. We are getting pretty good projects and customer feedback, But as mentioned in your blog post ("if candidate has worked in {ibm|infosys|tcs|satyam|patni..........any services firm in India} then move to Trash") something tells me inside that this is not something that we were supposed to be doing ! , Outsourcing projects , completing them , Fighting for payments slowly seeming to me a waste of time now.
Would love to have your suggestions....
Regards,
XXX
Co-founder
YYY"
This is something I have heard time and again and watch these companies with bright people just becoming high end consulting shops moving from one short-term project to another. I am by no means a purist and the advice I will provide is not going to take the moral high ground.
1. I have not seen any Silicon Valley company take the path of being a services company and succeed as a product company.
2. Most Indian companies which start out with a product vision but have to resort to services is primarily because:
a) they could not excite a VC or an Investor about their product Idea or the team and could not raise funding
b) believe that VCs /Angels are evil and think that giving up large chunks of equity to them is unjustified and they would rather become a services company to raise money
3. The Indian IT services industry is not about IP creation and works in the wafer thin less than ~20% profit margins zone. Product companies need to develop IP and working on projects does not help as you are generally working on somebody else's IP. I believe this kills the innovation capacity of startups. Nasscom would like for you to believe otherwise. You should seriously go to Nasscom's site and start reading their paid research if you believe them.
4. Delivering Services breeds some bad behavior in the team due to the time and material nature of billing. Poor quality code writing, lack of adequate quality control etc. However, the biggest issue I see is that developers become very impatient and don't enjoy long term product execution and building depth after working in the Services world. Typically short projects require you to learn something fast and to do something fairly basic with it. They believe that being a "Jack of All Trade and Master of None" and jumping from one technology to another as quickly as possible is the best way to remain competent. Their resumes look impressive with all kinds of cool technology listed in it but then when you interview this breed, you quickly realize that they can possibly string together a bunch of technologies and copy and paste code from Google to quickly create a nice prototype. But, if you ask them to turn this into a product that needs to scale, perform and deliver a quality experience, then they just haven't built the depth to do these things.
My advice is that if you are going to create a tech startup to build a cool new product or service, then you need to have the discipline to not get tempted by consulting/services opportunities. Stay the course, raise enough money to fund a team that can execute and execute like crazy. The IP you create will ultimately get you the valuation that will make you rich. Take the case of Zimbra, we raised US$31 million from VCs in 3 rounds of funding and were sold for US$350 million (~10X ROI to our investors) when we were making revenues well below US$20M per year. Services companies are typically valued around ~1.6 to 2 times revenue. The Indian IT services industry is an anomaly compared to the rest of the world and enjoys better valuations as IT Services is what is considered to be the Tech industry. This will change rapidly when IP creating technology companies start to grow and succeed in India. The Choice is very Simple :)
"Dear Abhinash,
I am XXX
I currently run my co-founded startup YYY with a team of 7 people.
The urge to email you started after reading your thoughts at http://randommusingsofabinash.blogspot.com/2009/06/building-kick-ass-team-part-i.html ! Pretty useful insights. However there are few challenges that we are facing and would love to have your suggestions over it.
We are basically a 6 months old startup who is working on social media strategies and as a web dev workshop, originally started with a vision of being a primarily product company we have shrunk to become a services company and see ourself under a deadlock . We need money to run our operations and thus need to make quick money. For quick money , We need to work. However , at the end of the month we end up spending all our time on outsourced projects and thus come in a deadlock of earning and spending.
However, we are doing good and are very positive. We are getting pretty good projects and customer feedback, But as mentioned in your blog post ("if candidate has worked in {ibm|infosys|tcs|satyam|patni..........any services firm in India} then move to Trash") something tells me inside that this is not something that we were supposed to be doing ! , Outsourcing projects , completing them , Fighting for payments slowly seeming to me a waste of time now.
Would love to have your suggestions....
Regards,
XXX
Co-founder
YYY"
This is something I have heard time and again and watch these companies with bright people just becoming high end consulting shops moving from one short-term project to another. I am by no means a purist and the advice I will provide is not going to take the moral high ground.
1. I have not seen any Silicon Valley company take the path of being a services company and succeed as a product company.
2. Most Indian companies which start out with a product vision but have to resort to services is primarily because:
a) they could not excite a VC or an Investor about their product Idea or the team and could not raise funding
b) believe that VCs /Angels are evil and think that giving up large chunks of equity to them is unjustified and they would rather become a services company to raise money
3. The Indian IT services industry is not about IP creation and works in the wafer thin less than ~20% profit margins zone. Product companies need to develop IP and working on projects does not help as you are generally working on somebody else's IP. I believe this kills the innovation capacity of startups. Nasscom would like for you to believe otherwise. You should seriously go to Nasscom's site and start reading their paid research if you believe them.
4. Delivering Services breeds some bad behavior in the team due to the time and material nature of billing. Poor quality code writing, lack of adequate quality control etc. However, the biggest issue I see is that developers become very impatient and don't enjoy long term product execution and building depth after working in the Services world. Typically short projects require you to learn something fast and to do something fairly basic with it. They believe that being a "Jack of All Trade and Master of None" and jumping from one technology to another as quickly as possible is the best way to remain competent. Their resumes look impressive with all kinds of cool technology listed in it but then when you interview this breed, you quickly realize that they can possibly string together a bunch of technologies and copy and paste code from Google to quickly create a nice prototype. But, if you ask them to turn this into a product that needs to scale, perform and deliver a quality experience, then they just haven't built the depth to do these things.
My advice is that if you are going to create a tech startup to build a cool new product or service, then you need to have the discipline to not get tempted by consulting/services opportunities. Stay the course, raise enough money to fund a team that can execute and execute like crazy. The IP you create will ultimately get you the valuation that will make you rich. Take the case of Zimbra, we raised US$31 million from VCs in 3 rounds of funding and were sold for US$350 million (~10X ROI to our investors) when we were making revenues well below US$20M per year. Services companies are typically valued around ~1.6 to 2 times revenue. The Indian IT services industry is an anomaly compared to the rest of the world and enjoys better valuations as IT Services is what is considered to be the Tech industry. This will change rapidly when IP creating technology companies start to grow and succeed in India. The Choice is very Simple :)
Will the Indian Newspaper Industry follow its US counterparts?
Having worked very closely with one of India's largest Media houses that owns the most distributed English daily and who operates an Internet Business, I can say with confidence that the Indian News Printing Business is headed in the same direction as the US newspaper business - down the deathward spiral :)
Marc Andreesen has a very nice entry in his blog titled Inaugurating the New York Times Deathwatch
More reading on this topic at http://www.newspaperdeathwatch.com/
I am a straight shooter and my insights into this business is purely based on my real world experience working with companies in this line of business. The reasons I believe that the Indian Newspaper business will become irrelevant are:
1. Leadership has a Journalism background - Most of the leadership in these companies is tenured gray haired journalists who paid their dues in the Print business and believe that the Internet model is very similar to the traditional print business. There isn't a single technology based Internet company that has had journalists as leaders. All of us saw the case of Terry Semel, the gray haired Media Industry Suit (not even a Journo) run Yahoo! to the ground. This breed believes in old school journalism and don't believe that Internet companies are all about delivering quality journalism using the the best technology.
2. Cannot disrupt their cash cow(Newspapers) - Successful Internet companies were created when something was disrupted for something better, faster, cheaper. However, traditional media houses cannot even start to think of the inevitable end of their cash cow business.
3. Lack of appreciation for technology - Since these companies are typically run by media industry suits or journalists and not the technologists who are viewed as the second class citizens in these organizations, all critical decision making is handled by the the non-techie kind.
4. Inability to qualify, attract, retain talent - since the management of these companies is so caught up in promoting their own kind (media suits or journalists), they cannot attract good technical talent to create and run their own Internet Service. In my own experience, this large media house that I worked with introduced me to a high flying CTO that they had hired who was an expat from the US and claimed to be the god of Java, the designer of Sun's coolest Hardware architecture and Scott McNealy's personal advisor. The first 5 minutes I spent with this guy basically told me that he had little to no background in technology and was a great conman. Some statements he made and I quote them verbatim:
" You know Java just sucks. I told Scott (McNealy) to just kill it"
" Why is your software so bloated? (he was referring to Zimbra) I wrote an Entire ERP system in Java that fits on a floppy"
" You know I had an idea that a VC offered US$1B for but I turned it down as I wanted to make it real and get a higher valuation" - this was classic, if I were him, I would have taken the US$1B for the idea :-)
Anyway, I walked away from that meeting shaking my head in utter disbelief and wondering how such large successful businesses could hire such conmen. But then on further analysis, I realized that these companies don't have the talent that can spot the technologists that will drive them into the history books of success and hence end up with people at senior technical roles that could alter a companies course completely due to their incompetence. A year after this episode, this CTO was fired and the media company filed a lawsuit to try and recover money from him. I think the CTO was smart, came from the US, enjoyed a fat expat package and took the naive company for a big ride.
5. Lack of understanding of equitable partnerships - A lot of Indian Media houses because of their sheer might and questionable ethics get away with very good deals for themselves and leave the partners (typically small startups or technology providers) to eat the crumbs. An undernourished ecosystem is as good as dead. I have seen this behavior time and again in the large companies in India who treat smaller companies like dirt. This behavior is further re-inforced as self funded or poorly funded startups desperate for cash who are not mature enough to understand contracts or hire lawyers to help understand the contracts simply sign on the dotted line. Very soon these startups die and the big Media house that just bet its core service on this company are now looking for other small startups to prey on. My message to startup founders is to be very vary of un-equitable partnerships. Have the courage to walk away from a bad deal. It doesn't matter how big or famous the partner you are working with is.
The largest media houses in India are still privately owned and not public companies. There is little to no visibility into their financials. I believe an Industry that has not been transparent to the Public is doomed to begin with. March on to your Deathward Spiral.......
Marc Andreesen has a very nice entry in his blog titled Inaugurating the New York Times Deathwatch
More reading on this topic at http://www.newspaperdeathwatch.com/
I am a straight shooter and my insights into this business is purely based on my real world experience working with companies in this line of business. The reasons I believe that the Indian Newspaper business will become irrelevant are:
1. Leadership has a Journalism background - Most of the leadership in these companies is tenured gray haired journalists who paid their dues in the Print business and believe that the Internet model is very similar to the traditional print business. There isn't a single technology based Internet company that has had journalists as leaders. All of us saw the case of Terry Semel, the gray haired Media Industry Suit (not even a Journo) run Yahoo! to the ground. This breed believes in old school journalism and don't believe that Internet companies are all about delivering quality journalism using the the best technology.
2. Cannot disrupt their cash cow(Newspapers) - Successful Internet companies were created when something was disrupted for something better, faster, cheaper. However, traditional media houses cannot even start to think of the inevitable end of their cash cow business.
3. Lack of appreciation for technology - Since these companies are typically run by media industry suits or journalists and not the technologists who are viewed as the second class citizens in these organizations, all critical decision making is handled by the the non-techie kind.
4. Inability to qualify, attract, retain talent - since the management of these companies is so caught up in promoting their own kind (media suits or journalists), they cannot attract good technical talent to create and run their own Internet Service. In my own experience, this large media house that I worked with introduced me to a high flying CTO that they had hired who was an expat from the US and claimed to be the god of Java, the designer of Sun's coolest Hardware architecture and Scott McNealy's personal advisor. The first 5 minutes I spent with this guy basically told me that he had little to no background in technology and was a great conman. Some statements he made and I quote them verbatim:
" You know Java just sucks. I told Scott (McNealy) to just kill it"
" Why is your software so bloated? (he was referring to Zimbra) I wrote an Entire ERP system in Java that fits on a floppy"
" You know I had an idea that a VC offered US$1B for but I turned it down as I wanted to make it real and get a higher valuation" - this was classic, if I were him, I would have taken the US$1B for the idea :-)
Anyway, I walked away from that meeting shaking my head in utter disbelief and wondering how such large successful businesses could hire such conmen. But then on further analysis, I realized that these companies don't have the talent that can spot the technologists that will drive them into the history books of success and hence end up with people at senior technical roles that could alter a companies course completely due to their incompetence. A year after this episode, this CTO was fired and the media company filed a lawsuit to try and recover money from him. I think the CTO was smart, came from the US, enjoyed a fat expat package and took the naive company for a big ride.
5. Lack of understanding of equitable partnerships - A lot of Indian Media houses because of their sheer might and questionable ethics get away with very good deals for themselves and leave the partners (typically small startups or technology providers) to eat the crumbs. An undernourished ecosystem is as good as dead. I have seen this behavior time and again in the large companies in India who treat smaller companies like dirt. This behavior is further re-inforced as self funded or poorly funded startups desperate for cash who are not mature enough to understand contracts or hire lawyers to help understand the contracts simply sign on the dotted line. Very soon these startups die and the big Media house that just bet its core service on this company are now looking for other small startups to prey on. My message to startup founders is to be very vary of un-equitable partnerships. Have the courage to walk away from a bad deal. It doesn't matter how big or famous the partner you are working with is.
The largest media houses in India are still privately owned and not public companies. There is little to no visibility into their financials. I believe an Industry that has not been transparent to the Public is doomed to begin with. March on to your Deathward Spiral.......
The next 5000 days of the web
At the 2007 EG conference, Kevin Kelly shares a fun stat: The World Wide Web, as we know it, is only 5,000 days old. Now, Kelly asks, how can we predict what's coming in the next 5,000 days?
Watch the talk
Watch the talk
TED India - Nov 4th - 7th 2009, Mysore, India - Be There!
Inspired speakers and game-changing ideas, evocative locations and transporting entertainment: TEDIndia offers a vision of the future that's rich with invention, entrepreneurship, cross-disciplinary problem-solving, unexpected solutions and sensory delight. Hosted in a country that’s reinventing itself – and reshaping the world …
Friday, June 26, 2009
Signup for iAccelerator Winter Edition 2009 in Bangalore - http://iaccelerator.org/
iAccelerator
Announcing the Winter 2009 edition of the iAccelerator.
Bangalore, India December 1, 2009 - April 1 2010
http://iaccelerator.org/
Wednesday, June 24, 2009
Building a Kick Ass Team - Part I
Surround yourself with people smarter than you and see the impossible become possible. Startup founders who have built the biggest baddest companies have lived by this philosophy and proven time and again that it is possible for small groups of people to impact the world. Take the case of Google, Facebook or Twitter and all of them have one thing in common, there are small groups of great people impacting the entire planet in a very profound manner.
In the Indian context, we are just starting to realize that the next generation of leaders will not be the grey haired tenured industry veterans or people that went to cram schools with a roster of degrees and brands like IIT and IIM. The next generation of leaders in India will be young people with a dream that could assemble other young people and go change the world. The US went through this revolution and the Valley is a place where there are so many examples of young people just taking on the world and making the impossible possible. In the valley, people are not measured by their fancy degrees or their age. People are measured by what they can contribute. I love an article written by Paul Graham titled "After Credentials" - if you don't follow Paul Graham, now would be a nice time to do so (piece of advice - don't get carried away by his LISP can change the world rant). The article refers to a culture like ours where kids are pressured by parents to go to cram schools to prepare for entrance exams to the esteemed institutions of IIT and IIM, or the so called elite services (Civil services IAS etc) that make up the bureaucracy in India is a culture of credentials. The culture of judging people by their credentials and not by their performance is just broken. We cannot recreate silicon valley in India if we continue down this broken path of hiring people with credentials instead of people that perform into teams. I have several life lessons to share here that have made me a big believer in this theory as well.
My first startup experience after Oracle was a small startup called Software.com which made large scale emails servers for the earliest ISPs on the planet and became a dominant force in this market. It had a blazing IPO where I remember our US$0.25 cents options trading at US$225 in the pre-bubble and with a market cap of ~US$8B. The founder John MacFarlane, another role model I try to embody and like Satish was one of the greatest tech startup CEOs I have ever worked with, believed that it was time to bring in a professional executive team to run the company as he was not capable of leading a ~US$16B company (we had merged with Phone.com - the inventors of WAP to create Openwave which was also a public company with similar valuation of ours). {I will in a later article discuss what happens when the original founders of a startup leave or are forced to leave and the executive team gets replaced by the so called heavy hitters brought on by the board - a very important topic.} John brought in the number 2 guy from Cisco to run Openwave who was the heir apparent to John Chambers back in 2000. This CEO then brought in a creamy layer from Cisco who slowly and steadily filled up the ranks of Openwave's management team and put Openwave on a trajectory of doom. This e-staff team decided that the young hands running marketing and product management in the company were incapable of running a "large" company like Openwave. They brought in a high powered marketing team of 5-6 individuals with credentials that looked very similar Harvard MBAs with P&G / McKinsey experience. One would expect a pedigreed team like this to propel the company into ranks of glory. Against popular belief the same marketing team created so much chaos in the market that it was obvious the company was doomed forever. Within 18-24 months all of these high powered MBA types were shown the door and after a few quarters the Cisco creamy layer could not manage the expectations of the street and the self propelled hype they created and soon exited through the same revolving doors. They all belonged to a class the US has started to despise called "the empty suits" like the execs from Wall Street Banks and the Automobile Industry.
My next run-in with the so called pedigreed kind was after I moved to India to setup Openwave India. I was hiring technical resources and I saw the resume of an IIT grad who had spent time as a technologist at a very large Indian Telco. He came to the interview 45 minutes late, was not apologetic, was dressed like he was from a slum and wanted a job in an multi-national. I was open and willing to overlook his appearance and demeanor and see if he had the technical acumen to make the cut. He greatly underwhelmed me with his knowledge of the Industry and Technology. He was a CS grad from IIT Kanpur with 3-4 years of experience. After this experience I thought that this was a one off case and was still open to the pedigreed kind.
Then in 2006 when I setup Zimbra in India and the IIT community caught wind of our operation I had a flood of resumes of IIT grads who were graduating from various IITs who were looking for Jobs with Zimbra. I was delighted and talked to Satish about how I thought we could hire these talented young guys and create a kick ass engineering team. Then we put these guys through the paces of our recruitment process whose first gate was to write a piece of software in 12 hours in Java to test their coding skills. Not one IIT grad passed the first gate :-) I am not trying to generalize here and I dont live in an illusionary world. There are clear examples of great leaders from IIT in the past in our industry. However, I feel that somewhere along the way IITs have just lost the quality didactic capabilities of the past. What they are churning out today is an underwhelming set of people not hirable by startups and high-tech software companies. I think the current breed of IITs is being molded for an Infosys or a TCS job. The kick ass engineers in Zimbra India came from a team I cherry picked from Zoho famous for hiring hungry young engineers from the so called Tier-2 engineering schools in India and training them on the latest technologies. Each every one of these hires I would hire again in my next startup :-) Young, hungry, motivated, committed and most importantly humble...... these are the qualities I look for and not credentials.
More interesting reading on this topic here:
IIT Grad == Excellent Programmer?
How the IITs can suck less
1. Hire the absolute best - Talent acquisition in India SUCKS! I have tried to work with a number of talent/recruiting agencies in India including the big names and each and every one underwhelmed me. Unlike the Valley where some of the top recruiters understand how to source top notch talent due to their sheer experience working with startups and product companies, the recruiting firms we have in India have ZERO capability to hire quality talent. All recruiting companies simply go and search the popular job boards for resumes and do a simple key word search extracted for the Job Description you provided them and then the only level of filter is a casual conversation with the candidates on their requirements. I remember getting a flood of resumes that were totally unqualified from each and every recruiter we were using. Imagine the effort you spend in screening this mountain of resumes to find the needle in the haystack. It actually got worse when we became a part of Yahoo. You would imagine someone like Yahoo having the best talent acquisition teams in India. What we got back from Yahoo's TA team was worse than what we were getting from our recruiters. It really seems like talent acquisition in India is designed for the volume hiring that the IT services firms do. My advice to startup entrepreneurs is to network like crazy with groups where a lot of tech savvy entrepreneurs get together (barcamps, tweetups and the like), troll linkedin and network individually, find companies that are doing good related work but don't have the right environment to motivate and retain employees and cherry pick their best and brightest (this worked beautifully for me. I was successful in hiring the 5 top guys from Zimbra's then perceived competitor Zoho. This may sound unethical but hey we all live in a competitive world where only the best must win). Most of the young entrepreneurs I have met also believe that the only requirement when hiring technology people is technical knowledge and coding skills. While this is a given that you need to hire the best coders, you also need to be absolutely sure that the person has the right drive, motivation, energy, ethics and capability to work in a team. People make all the difference between a successful tech startup and a Loser. Hire the best and see the results for yourself.
2. Raise the bar with each hire - To vote them on to the island the candidate that is hired has to be better than our existing standards (which has to be the best in the world) - when you are hiring key resources into your enterprise, imagine you are stranded on an island with 10 candidates and a lifeboat lands from the heaven for 2 people. You now have to choose one out of the 10 that will ensure your safe passage back to mainland. For this not only do you need someone who is the strongest that can help you row the boat back to mainland but you need someone with the highest level of integrity - someone who will not push you out of the boat so he / she can have a safe passage easily. At Zimbra we were known to have set the highest level of recruiting standards for our Engineers. So high was the standard that my guys would receive calls from Google India recruiters trying to hire them away regularly. The culture at Zimbra was so strong that the Engineers never even felt like talking to the Google recruiters. They would walk into my office with the email and laugh about how lame the Google recruiters were and then discuss the latest 8 hour outage of Gmail and how even Google cannot build the best email system in the world. This confidence that the Zimbra Engineers exuded was passed down all the way from Satish and really helped us kick Gmail and Microsoft Exchange in the back side :)
3. Filter out the faint of heart - One strategy that worked for me was to set stringent filters for hiring. I then enforced these filters with all of my recruiters where the penalty was getting fired for sending me one resume that slipped through the filter. My filter was very simple:
if candidate has worked in {ibm|infosys|tcs|satyam|patni..........any services firm in India} then move to Trash
I know this may sound too out in the left field but trust me this was the best thing I ever did from a HR standpoint. The Services Industry was great in taking India to the Digital Age. It created the new economy and provided many jobs and bettered peoples lives. However, the same industry is caught in its own rut. This is an industry that has not evolved or created a single innovation that the world can point to as exemplary. They continue to induct 1000s of people into software factories where these employees are made to work on fairly automated software processes on projects that were considered non core by US companies and offloaded to a lower cost model. Why has Infosys - "the so called Microsoft of India" not come up with a single innovation or product that the world can point to and say "hmmm. that is cool!"? For more on this topic read Om Malik's article written in 2007 - Troubling Signs for Indian Tech Outsourcers. If I were to gaze into the crystal ball, I can only see two outcomes for the Tech Outsourcing Industry in India - they reinvent themselves and start creating IP and products and push India into a new era of greatness (or) the Bangalore IT Outsourcing industry goes down in the history books as an Industry that could not stay competitive and die like the auto industry in Detroit. Something tells me that the latter is the most likely scenario for India's tech outsourcing industry.
The other issue with the software Industry is that intense competition led to artificial escalation in wages at a totally unsustainable rate. The Indian IT industry is one of a kind in the world where wages increased in double digits year over year for a long period of time. I am a big believer in paying highly skilled and high performance individuals well over the industry and I am also known to have doubled my best resources salary 2 times in a single year. Most of the services industry folks do not fit the description of a high performance or highly skilled engineer but have expectations that are just unreasonable. This is an important message to many startup founders. Hire people that are hungry and willing to work for low salaries and higher equity initially. If you find that they exceed your expectations quickly raise their salaries to a level that it becomes a non issue for the employee for a long time.
Some other filters early stage startup founders may want to consider at the early stage are the following:
if {MBA | product analyst | business development type| project manager..........} then make sure you are absolutely sure that they are not empty suits.
So, who is this breed known as empty suits........ it is mostly people who:
1. don't have a deep understanding and more importantly INSIGHTS of technology, markets or have the inclination or drive to learn it.
2. when asked if you follow pluggd.in, techcrunch, gigaom, allthingsd, guykawasaki.com, paulgraham.com respond with a "ummm... I dunno, what is that?"
3. have never ever coded in their lives
4. believe that the MBA type is a higher class than the hacker type
5. believe their role is to tell the engineers what to do - I love this one!
6. don't understand the social phenomenon of the Internet - linkedin, twitter, fb etc
7. seemed to have walked the proven path and never broken rank (IIT, IIM, Management Consulting or Services type of career path)
8. hide behind powerpoints and throw mba jargon when they cannot understand technology issues
9. believe that impressing engineers is by writing a long list of un-prioritized features with no justification on why they matter
10. don't understand the terms seo, sem, social marketing, blogging etc
and the list goes on which you are probably getting a hang off now.
Let us all face it the only people who matter in a technology startup is people who build stuff and people who can sell stuff. The rest are overhead. Hire overhead carefully and only if you need it in-house. Most overhead skills can be outsourced. Even when Zimbra grew to 40 in India, we had one overhead - an office manager whose primary role I had defined was to keep the office entertained (dragging people out to parties, making sure they were well fed etc). The office manager was the one that coordinated with all our outsourced vendors for accounting, payroll etc.
(to be continued....)
In the Indian context, we are just starting to realize that the next generation of leaders will not be the grey haired tenured industry veterans or people that went to cram schools with a roster of degrees and brands like IIT and IIM. The next generation of leaders in India will be young people with a dream that could assemble other young people and go change the world. The US went through this revolution and the Valley is a place where there are so many examples of young people just taking on the world and making the impossible possible. In the valley, people are not measured by their fancy degrees or their age. People are measured by what they can contribute. I love an article written by Paul Graham titled "After Credentials" - if you don't follow Paul Graham, now would be a nice time to do so (piece of advice - don't get carried away by his LISP can change the world rant). The article refers to a culture like ours where kids are pressured by parents to go to cram schools to prepare for entrance exams to the esteemed institutions of IIT and IIM, or the so called elite services (Civil services IAS etc) that make up the bureaucracy in India is a culture of credentials. The culture of judging people by their credentials and not by their performance is just broken. We cannot recreate silicon valley in India if we continue down this broken path of hiring people with credentials instead of people that perform into teams. I have several life lessons to share here that have made me a big believer in this theory as well.
My first startup experience after Oracle was a small startup called Software.com which made large scale emails servers for the earliest ISPs on the planet and became a dominant force in this market. It had a blazing IPO where I remember our US$0.25 cents options trading at US$225 in the pre-bubble and with a market cap of ~US$8B. The founder John MacFarlane, another role model I try to embody and like Satish was one of the greatest tech startup CEOs I have ever worked with, believed that it was time to bring in a professional executive team to run the company as he was not capable of leading a ~US$16B company (we had merged with Phone.com - the inventors of WAP to create Openwave which was also a public company with similar valuation of ours). {I will in a later article discuss what happens when the original founders of a startup leave or are forced to leave and the executive team gets replaced by the so called heavy hitters brought on by the board - a very important topic.} John brought in the number 2 guy from Cisco to run Openwave who was the heir apparent to John Chambers back in 2000. This CEO then brought in a creamy layer from Cisco who slowly and steadily filled up the ranks of Openwave's management team and put Openwave on a trajectory of doom. This e-staff team decided that the young hands running marketing and product management in the company were incapable of running a "large" company like Openwave. They brought in a high powered marketing team of 5-6 individuals with credentials that looked very similar Harvard MBAs with P&G / McKinsey experience. One would expect a pedigreed team like this to propel the company into ranks of glory. Against popular belief the same marketing team created so much chaos in the market that it was obvious the company was doomed forever. Within 18-24 months all of these high powered MBA types were shown the door and after a few quarters the Cisco creamy layer could not manage the expectations of the street and the self propelled hype they created and soon exited through the same revolving doors. They all belonged to a class the US has started to despise called "the empty suits" like the execs from Wall Street Banks and the Automobile Industry.
My next run-in with the so called pedigreed kind was after I moved to India to setup Openwave India. I was hiring technical resources and I saw the resume of an IIT grad who had spent time as a technologist at a very large Indian Telco. He came to the interview 45 minutes late, was not apologetic, was dressed like he was from a slum and wanted a job in an multi-national. I was open and willing to overlook his appearance and demeanor and see if he had the technical acumen to make the cut. He greatly underwhelmed me with his knowledge of the Industry and Technology. He was a CS grad from IIT Kanpur with 3-4 years of experience. After this experience I thought that this was a one off case and was still open to the pedigreed kind.
Then in 2006 when I setup Zimbra in India and the IIT community caught wind of our operation I had a flood of resumes of IIT grads who were graduating from various IITs who were looking for Jobs with Zimbra. I was delighted and talked to Satish about how I thought we could hire these talented young guys and create a kick ass engineering team. Then we put these guys through the paces of our recruitment process whose first gate was to write a piece of software in 12 hours in Java to test their coding skills. Not one IIT grad passed the first gate :-) I am not trying to generalize here and I dont live in an illusionary world. There are clear examples of great leaders from IIT in the past in our industry. However, I feel that somewhere along the way IITs have just lost the quality didactic capabilities of the past. What they are churning out today is an underwhelming set of people not hirable by startups and high-tech software companies. I think the current breed of IITs is being molded for an Infosys or a TCS job. The kick ass engineers in Zimbra India came from a team I cherry picked from Zoho famous for hiring hungry young engineers from the so called Tier-2 engineering schools in India and training them on the latest technologies. Each every one of these hires I would hire again in my next startup :-) Young, hungry, motivated, committed and most importantly humble...... these are the qualities I look for and not credentials.
More interesting reading on this topic here:
IIT Grad == Excellent Programmer?
How the IITs can suck less
1. Hire the absolute best - Talent acquisition in India SUCKS! I have tried to work with a number of talent/recruiting agencies in India including the big names and each and every one underwhelmed me. Unlike the Valley where some of the top recruiters understand how to source top notch talent due to their sheer experience working with startups and product companies, the recruiting firms we have in India have ZERO capability to hire quality talent. All recruiting companies simply go and search the popular job boards for resumes and do a simple key word search extracted for the Job Description you provided them and then the only level of filter is a casual conversation with the candidates on their requirements. I remember getting a flood of resumes that were totally unqualified from each and every recruiter we were using. Imagine the effort you spend in screening this mountain of resumes to find the needle in the haystack. It actually got worse when we became a part of Yahoo. You would imagine someone like Yahoo having the best talent acquisition teams in India. What we got back from Yahoo's TA team was worse than what we were getting from our recruiters. It really seems like talent acquisition in India is designed for the volume hiring that the IT services firms do. My advice to startup entrepreneurs is to network like crazy with groups where a lot of tech savvy entrepreneurs get together (barcamps, tweetups and the like), troll linkedin and network individually, find companies that are doing good related work but don't have the right environment to motivate and retain employees and cherry pick their best and brightest (this worked beautifully for me. I was successful in hiring the 5 top guys from Zimbra's then perceived competitor Zoho. This may sound unethical but hey we all live in a competitive world where only the best must win). Most of the young entrepreneurs I have met also believe that the only requirement when hiring technology people is technical knowledge and coding skills. While this is a given that you need to hire the best coders, you also need to be absolutely sure that the person has the right drive, motivation, energy, ethics and capability to work in a team. People make all the difference between a successful tech startup and a Loser. Hire the best and see the results for yourself.
2. Raise the bar with each hire - To vote them on to the island the candidate that is hired has to be better than our existing standards (which has to be the best in the world) - when you are hiring key resources into your enterprise, imagine you are stranded on an island with 10 candidates and a lifeboat lands from the heaven for 2 people. You now have to choose one out of the 10 that will ensure your safe passage back to mainland. For this not only do you need someone who is the strongest that can help you row the boat back to mainland but you need someone with the highest level of integrity - someone who will not push you out of the boat so he / she can have a safe passage easily. At Zimbra we were known to have set the highest level of recruiting standards for our Engineers. So high was the standard that my guys would receive calls from Google India recruiters trying to hire them away regularly. The culture at Zimbra was so strong that the Engineers never even felt like talking to the Google recruiters. They would walk into my office with the email and laugh about how lame the Google recruiters were and then discuss the latest 8 hour outage of Gmail and how even Google cannot build the best email system in the world. This confidence that the Zimbra Engineers exuded was passed down all the way from Satish and really helped us kick Gmail and Microsoft Exchange in the back side :)
3. Filter out the faint of heart - One strategy that worked for me was to set stringent filters for hiring. I then enforced these filters with all of my recruiters where the penalty was getting fired for sending me one resume that slipped through the filter. My filter was very simple:
if candidate has worked in {ibm|infosys|tcs|satyam|patni..........any services firm in India} then move to Trash
I know this may sound too out in the left field but trust me this was the best thing I ever did from a HR standpoint. The Services Industry was great in taking India to the Digital Age. It created the new economy and provided many jobs and bettered peoples lives. However, the same industry is caught in its own rut. This is an industry that has not evolved or created a single innovation that the world can point to as exemplary. They continue to induct 1000s of people into software factories where these employees are made to work on fairly automated software processes on projects that were considered non core by US companies and offloaded to a lower cost model. Why has Infosys - "the so called Microsoft of India" not come up with a single innovation or product that the world can point to and say "hmmm. that is cool!"? For more on this topic read Om Malik's article written in 2007 - Troubling Signs for Indian Tech Outsourcers. If I were to gaze into the crystal ball, I can only see two outcomes for the Tech Outsourcing Industry in India - they reinvent themselves and start creating IP and products and push India into a new era of greatness (or) the Bangalore IT Outsourcing industry goes down in the history books as an Industry that could not stay competitive and die like the auto industry in Detroit. Something tells me that the latter is the most likely scenario for India's tech outsourcing industry.
The other issue with the software Industry is that intense competition led to artificial escalation in wages at a totally unsustainable rate. The Indian IT industry is one of a kind in the world where wages increased in double digits year over year for a long period of time. I am a big believer in paying highly skilled and high performance individuals well over the industry and I am also known to have doubled my best resources salary 2 times in a single year. Most of the services industry folks do not fit the description of a high performance or highly skilled engineer but have expectations that are just unreasonable. This is an important message to many startup founders. Hire people that are hungry and willing to work for low salaries and higher equity initially. If you find that they exceed your expectations quickly raise their salaries to a level that it becomes a non issue for the employee for a long time.
Some other filters early stage startup founders may want to consider at the early stage are the following:
if {MBA | product analyst | business development type| project manager..........} then make sure you are absolutely sure that they are not empty suits.
So, who is this breed known as empty suits........ it is mostly people who:
1. don't have a deep understanding and more importantly INSIGHTS of technology, markets or have the inclination or drive to learn it.
2. when asked if you follow pluggd.in, techcrunch, gigaom, allthingsd, guykawasaki.com, paulgraham.com respond with a "ummm... I dunno, what is that?"
3. have never ever coded in their lives
4. believe that the MBA type is a higher class than the hacker type
5. believe their role is to tell the engineers what to do - I love this one!
6. don't understand the social phenomenon of the Internet - linkedin, twitter, fb etc
7. seemed to have walked the proven path and never broken rank (IIT, IIM, Management Consulting or Services type of career path)
8. hide behind powerpoints and throw mba jargon when they cannot understand technology issues
9. believe that impressing engineers is by writing a long list of un-prioritized features with no justification on why they matter
10. don't understand the terms seo, sem, social marketing, blogging etc
and the list goes on which you are probably getting a hang off now.
Let us all face it the only people who matter in a technology startup is people who build stuff and people who can sell stuff. The rest are overhead. Hire overhead carefully and only if you need it in-house. Most overhead skills can be outsourced. Even when Zimbra grew to 40 in India, we had one overhead - an office manager whose primary role I had defined was to keep the office entertained (dragging people out to parties, making sure they were well fed etc). The office manager was the one that coordinated with all our outsourced vendors for accounting, payroll etc.
(to be continued....)
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