Startup in bad economy

What happens to the startup sector when economy goes south? Let us discuss top 3 drivers one by one:
1. Funding: Dries up. Very hard to get money for new ventures. (Negative)
2. Resources: Good opportunity. A lot of high talented people in tech, marketing, operations etc are looking for jobs. Simple rule of demand-supply and you can see the picture. (Positive)
3. Creativity: Necessity is the mother of invention. With that phrase, I would call it positive.

In MBA terms, I would put them as : Finance, Operations, and Innovation. All 3 of them are required to launch a succesful comnpany. With 2 positives and 1 negative (finance), it does not bode well. But..hold on a sec...do we really need a lot of capital to start a new Internet company? Also, bad economy means that operations will become a bit inexpensive as well. So, its not a dire situation.

Overall, it boils down to individuals. Succesful entrepreneurs and VCs would tell you that its the team that matters (not the idea). And in a downward economy, it might matter a bit more. But at the end of the day..it depends on you. If you have that "instinct"..then you will survive. If not, then join the ever increasing club :)

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Contextual slideshow: Dig up your old but similar content

We recently released a new widget: "Contextual slideshow" and have received some very encouraging feedbacks. This is a marvelous product that brings value to blog readers as well as increases page views for bloggers.

Here are some of the features:

1. Displays "contextual images from your blog". This means that your readers will get more similar content which you wrote several days/weeks ago.

2. This beautiful slideshow increases bloggers' page views. Simply put, a reader gets to see more articles..and bloggers get more page views.

3. "Zero" customization required: Absolutely no customization is required. Just get it from the site and display it. It automatically adjusts in the blog page, sideroll or anywhere else.

4. It broadcasts the bloggers' content to other blogs. This enables bloggers to get new readers to their blogs.

We have put a demo slideshow in our sideroll. Get a slideshow of your own and broadcast your blog to the world!!

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blogoxy brings more readers to the bloggers

So, at last http://blogoxy.com is standing on its feet. A lot of hard work has gone in this project and looking back I and my team feel so good!

You can imagine how excited we all are. I hope that our efforts bring color and can help fellow bloggers.

I have been so frustrated because there is no good mechanism to market the blogs. Hopefully, http://blogoxy.com will empower fellow bloggers for marketing their blogs.

We are starting in a very soft way. Thats the reason why we are launching only for food blogs. Yes...I love food. And food is the reason why we all survive. So, in true fashion of a food enthusiast, blogoxy is open for fellow food bloggers.

Please give us your feedback. And yes...do visit our blogoxy blog at: http://blogoxy.com/blog

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Banks and M&A

As I stated in my last post, here are some thoughts from Reuters:

http://www.reuters.com/article/AIRDEF/idUSN0539241020080505

Why did banks advise Yahoo to not go down below $37? O well, simple answer: they did not. It was Yahoo's decision not the bankers' decision to not go below $37. If it was all for the investment banks, they would sell Yahoo for $20 per share. Afterall, they want their commission. Don't they?

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Microsoft cancelled bid for Yahoo: Why is it good news?

M&A is a tricky business and I am happy for Yahoo! as well as for Microsoft that this transaction did not go through.

Reason:

1. Investment banks and consulting companies (almost) always overstate the synergies in the transaction. Its a simple reason: They get a large chunk of money in the form of transaction fees if the merger goes through.

2. Had the deal gone through, it would have been an uphill task for Yahoo & Microsoft to merge the work-cultures, maintain the Yahoo brand equity, and integrate the operations.

3. Consolidation in this space is not a good thing for the market. Yahoo and Microsoft both like to acquire small companies and this trend boosts the innovative landscape in the valley. Imagine what would have happened (for smaller companies’ acquisitions) if Yahoo would have ceased to exist and Microsoft would have spent a considerable chunk of its kitty on the acquisition.

Good luck to Yahoo and Microsoft. Yahoo! has to come back and execute on the “statement” that it deserves more valuation. I have no doubt in their ability but am not sure about what their strategic vision is. There should be an internal “cleansing” operation within Yahoo so that it can find its glory days once again!

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Why good education matters

I am finishing my MBA this week. Looking back, time flew really fast. Things were hectic in school, and here I am, on the verge of graduating. So, what did I learn in these 2 years? Did it make any difference in my life? If yes, then how?

I have been a big supporter of good education. Not because it prepares you for a good job, but because it opens up the mind. It broadens the thinking horizon. Job is a by-product of good education. But more importantly, it grooms an individual for challenges in life.

Personally, for me, the school (MBA) has changed me fundamentally. If I compare myself from what I was 2 years ago, there is a huge difference. Yes, I learned the analytical skills, the formulas, the concepts..yada yada yada. But the core difference that it has made in my life is about the way I see the world. I have never been so confident about myself and my abilities as I am today. I believe that the choice of school matters a lot. Every MBA school teaches the same core MBA concepts, formulas, and analytical skills. But there are other "secondary" skills: overall development, leadership etc that vary hugely depending on the institution.

I am starting a new life from this week onwards. And where I will be 2 years from now, 5 years from now, or even 10 years from now will depend on what "secondary skills" I learned at the school. I am bustling with confidence and positive outlook. My goals and objectives that I have set for myself are much more reachable because of the change that I see in myself. Will keep you updated with the latest.

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Venture Capital Industry - Needs overhaul?

I am currently in Silicon Valley and as most other people, this time I am trying to "feel" it. I lived here in the past but did not try that. Certainly, you cant feel it if you dont want to. But to live the dream, you have to "feel" it. Open your eyes and look around. Almost 20 companies come out every single day. Almost 100 networking events take place every week. Total amount of VC money flowing into the Silicon Valley startups is more than anywhere else in the world. Possibly it is even more than the sum total of money elsewhere in the world.

With this much optimism, there comes the noise. Yes, a lot of good companies are coming up, but with them come up a full breed of companies which were never meant to be successful. Most of the companies fail to take off and die prematurely. Some of them are funded and some of them perish even before that. It is a common perception among VC community that 90% of startups fail. Seems that everyone has agreed to this rule. Looking closely, this rule says that even well seasoned VCs cant figure out which companies will succeed. They make their judgment based on some criteria and 90% of the times those criteria give wrong results.

Bottom line: There is 90% error in choosing the right company for investment.

Is it not a very high number given the fact that we live in this age where more and more focus is on accuracy and error-reduction? Imagine getting a fish-o-fillet sandwich 9 out of 10 times you order a hamburger at McDonald's? Or imagine a calculation error 9 out of every 10 times you buy stocks online? Something is very wrong with the VC money now a days? Is it the lack of good foresight or is the market full of VC firms who make investments as if they are buying a lottery ticket? 90% failure rate can not be caused by just the incompetency of the entrepreneurs. It is a cyclic process; if incompetent entrepreneurs get money; then they run their company shabbily...only to go burst after 6 months. They know that the threshold of getting the money is low and therefore never try hard enough to reach the superior level which is required to execute a successful company. I do not intend to say that getting money is easy. Its not. Should it be made even harder? Maybe. Investors should try harder by tightening the monetary control to elevate the entrepreneur's motivation for succesful exit from the venture. Simple question: Why is Private Equity more successful than Venture Capital industry? Answer: Superb financial control and execution.

Something needs to be done. I don't know what that is, but something has to be done. We can be realistic and try to improve this result in incremental fashion (20%, 30%, 40% success rate), but at least a beginning has to be made so that we do not go back to the Dot com burst stage again. Some well reputed VC firms do invest in a very sophisticated way; and they get good ROI also. My question is about those VC firms who do not have enough experience or credibility for making good decisions. We saw one tech-burst not so long ago; should they be allowed to convert a tech-ride into a possible burst scenario again? Should there be some industry obligations? Or is it ok to accept them as they are...after all its the money of their private investors and they have the right to use it in any way they want?

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