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The Smart Techie was renamed Siliconindia India Edition starting Feb 2012 to continue the nearly two decade track record of excellence of our US edition.

Startups We Would Like to Fund

Jagannath Rao
Tuesday, October 26, 2010
Jagannath Rao
Before Surya, Kallol and I founded Headstart Ventures LLP, we had seen many queer things in the startup land. But topping it all was an invite to a theme park ride by Subhash who was an old classmate of mine. After a couple of rides and a roller coaster that left me gasping for breath, I gave up and compelled Subhash to get down to a serious discussion.

In his usual nonchalant manner he replied, “What happened to you? Don’t you enjoy this anymore? You know, I come to a new joint like this every weekend just to break the lethargy at work”. Then he went on to tell his story. That he had been working on an idea for a few months over the weekend with friends, and that they were all excited but did not want to take the plunge yet. The glass office that fattened him had, by now, also addicted him to comfort levels of a couple of homes, a chauffeur driven car, and still leaving enough to take a couple of vacations a year as well. So I asked Subhash, “What do you need in order to take the plunge?” He said his dilemma was that he was comfortable paying his debts and couldn’t just change his lifestyle. So I asked how much time
did he need to change. He said six months was enough to tone down his comfort. Quizzingly, I then asked him if he trusted me. Did he completely believe in his idea? How long did he think the venture will live? He interrupted me and said, “Of course I believe in it,” and then went on to describe his idea. The idea was a great one. But he was wise enough to realize that the idea was but a tenth of the road ahead. The big challenge was to ride on the technology roller coaster – the hype curve. Having crossed that, also onward to cross the unknowns in the chasm; and having straddled the chasm, then to create a stainable biz model that wins customers in the market; and then scales. To goad him along, I asked him, “What comes first? The market? Or the idea? Or the technology? The glint in his eyes told me that he had been through this many times. “Well,” he pondered and hesitated a bit. “You know it’s kind of a complex thing. Sometimes it’s understanding the market opportunity and doing something cleverly. Sometimes it’s putting a new idea in a new market. And sometimes it’s applying a new technology to solve an old problem. So it’s a complex combination and one has got to really figure it out. But there are three things it has got to solve for sure to be a success: A pain point, a value point for the customer, and a way for the market to adopt it by doing something that appeals. So it is innovation everywhere around.”

Seeing this coming from a glass office person, I was truly amazed and asked him how helearnt all this? He said he had invested in three startups, which had all failed. In the first venture, the idea was great and he thought it would just be a winner pants down. He was shocked when the market did not adopt the idea despite the unquestionable benefits. In the second, he insisted that winning in the market was important and got a market expert to drive the venture. Again it failed after some time because it did not have any “real” edge especially in technology. So in the third venture that he had invested in, he brought in a technologist who created an inconceivable product. But again, it failed because the timing and market forces were not right. By this time he had lost all his money and had to get into a glass office. He realized how the VCs who wanted to co-invest had provided inputs to him and politely delayed financing when he did not pay attention to their caution.

He was broke but still full of zeal and passion to invest further. That’s when his uncle asked him to approach an angel investor network. And this time, he had a great idea that solved a pain point, he had the technology that created value to the customer, and he had a strategy to create the market buzz and signup paying customers. He sold his car and financed the venture along with the angel network. To his joy, the venture was a huge success within a year and he was very happy to exit the venture as a very rich man. Rich in experience as well. But it left his family gasping for breath and so he was now in a lucrative job that kept him in the comfort of a glass office.

Ending his story he asked me, “I am itching for the next ride. Do you want to join me? How about the Drop Zone. It’s the biggest one I have seen.” I will tell you about my idea after the ride.

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