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The Startup Owner’s Manual [Review]

guest — Mon, 21 May 2012 04:23:26 +0000

The Startup Owner’s Manual is the latest book by Steve Blank and Bob Dorf. It has been taking the business and startup world by storm. I read it only recently and realized how much you are losing by running your startup without reading and implementing this book.

These have been lot of gushing praise about this book, but one quote about this book in particular was apt.

"What Kent Beck and company did for agile software development, Steve Blank has done for the startup community."

If you don’t know Kent Beck, he was one of the first people to document design patterns, which allowed developers to talk about code at a higher level of abstraction. The startup owner’s manual documents the design patterns in early stage businesses. Kent Beck’s book is a seminal work in software development and I have no doubt that The Startup Owner’s manual is also going to be a game changer.

The book claims that it is "The Step-By-Step Guide for Building a Great Company". It lives up to it’s tagline. The book is highly prescriptive. It will tell you in detail what you should do on day 1 of your startup and what you should do once step X is done. (Most books in it genre have been descriptive, describing successful businesses and inferring what worked. The Startup Owner’s manual doesn’t pull punches. It is opinionated, it tells you exactly what you should be doing and when.)

Steve Blank is entrepreneur who started 8 companies, now is a professor at Stanford. He first wrote about customer development methodology in his book The Four Steps to the Epiphany, which is credited with jumpstarting the lean startup movement. This books builds on the ideas proposed in The Four Steps to the Epiphany, and provides more detailed and step-by-step guideline on how to go about doing customer development.

The book preface says "Don’t read too much at a time" and say "… this book has more in common with a car repair manual than your favorite page turner." Good points as this book is fairly dense and if you try reading too much at one do you will probably not get much out of the book. Thankfully the book is well organized in various time phase a startup is.

Depending on the phase your startup is you can choose what you should be reading.

A bit about customer development

Customer Development is a methodology of finding product-customer fit. It says your first ideas about who your customers are going to be, why they by, what channels they buy from are wrong. Only by talking to customers and trying them to buy you Minimal Viable product would you be able to find a customer for your product. You have to get out of building to talk to customers, you have to pivot your product to fit what the customer wants. This book tell you how to do customer development via customer discovery and customer validation.

Most startups would be happy to get the Director of Sales at Oracle to join their company as sales. The book tells you why this is a bad idea. "A startup is not a miniature version of a large company." A person who has experience only at a large company would like to grow big fast. Startup owner’s manual advises against scaling until you have achieved a product-market fit. The book is full of advice and how-to like this.

The book is divided in these sections.

A startup is not a small version of a large company.
The customer development model.
Introduction to customer discovery
State your business model hypothesis
Get out of the building: Do People care
Get out of the building: Test the solutions
Introduction to customer validation
Get ready to sell
Get out of the building and sell
Company positioning
Proceed or Pivot.

Each of these chapters deal with specific times of a startup lifecycle and tell you what you should be doing in that stage in a detailed how-to way.

Some caveats

The book is highly prescriptive and suited for US markets. Apply your common sense before applying everything suggested here.
The book is big 500+ pages, give it time and read chapters which affect you.

Links to Books

[This is a guest post by Shabda Raaj of Agiliq. Their blog talks about many technical topics such as build web and mobile apps.]

[Note: Book links are affiliate links]

Critical Clauses in Shareholders’ agreement – A brief overview

Nirupama Krishnaswami — Mon, 14 May 2012 11:33:02 +0000

[Editor’s Note: We at trak.in, have been getting requests from our readers to cover legal aspects involved during company formation, mergers, Copyright / Trademark issues, equity investments etc. Therefore, we are starting a series where these issues will be covered]

A Shareholders’ Agreement between shareholders of a private limited company is a contract that details the various provisions that will govern each of the shareholders who are party to the agreement vis-à-vis the Company and the shares held by each such shareholder and also the provisions that will govern the management of the Company as agreed to by the parties to the agreement. It may be noted that in case of a public limited company, there may be enforceability issues with certain provisions of the shareholders’ agreement.

Under Indian law and based on the judicial pronouncements of Indian courts in respect of Shareholders’ Agreements, it may be noted that in order for the Shareholders’ Agreement to be binding on all Shareholders of a company and also on the company itself, many provisions o of the Shareholders’ Agreement would have to be also incorporated in the Articles of Association of the Company and the Articles must be amended to remove any inconsistencies with the provisions of the Shareholders’ Agreement.

Some of the critical clauses in a typical Shareholders’ Agreement between shareholders of a private limited company would be:

1. Representations and warranties from the Company and its Promoters

Any investor who invests in a company would insist on certain representations and warranties being made by the Company and its promoters about the financial position of the company, compliance with laws by the company, litigations and claims against the company, assets of the company, liabilities of the company, status of the shares that are to be issued to/purchase by the investor and so on. The language of each representation and warranty should be carefully reviewed and if necessary, negotiated. Any exceptions to such representations and warranties must also be clearly captured. Promoters may make certain representations and warranties on a “best of their knowledge and belief” basis.

2. Composition of Board of directors of the company and other management related matters

The shareholders may agree on the maximum number of directors on the Board, the number of nominee directors from each party, who will be the chairman of the Board meeting, quorum for board meeting, whether chairman will have casting vote and other such matters pertaining to the Board. Matters that require unanimous consent of the directors and matters on which a party’s nominee director shall have veto rights will also be addressed in this clause. By virtue of this provision, a shareholder may get control of the Board and the decisions of the Company that are taken at the Board level may also be steered through veto rights.

3. Lock-in/first right of refusal/tag along/drag along

A lock in clause impose restrictions on alienation/sale of shares held in the company by either party without prior approval of other party for a certain period of time. A First right of refusal clause makes it obligatory on a shareholders who wants to sell his shareholding, to first offer his shares to the other shareholder who is party to the Shareholders’ Agreement on the same terms and condition on which he proposes to sell it to a third party. If the Shareholders’ Agreement has a drag along clause then in the event that one shareholder wishes to sell his shares to a third party, then he can require the other shareholder who is party to the Shareholders’ Agreement to also sell his shares to the same third party on the same terms and conditions. A tag along clause gives a shareholder the right to insist that his shares also be sold to a third party to whom the other shareholder proposes to sell his shares, on the same terms and conditions.

3. Restriction further issue of shares, any anti dilution rights, Pre-emptive rights

By these clauses, the Company’s right to issue further shares or raise further capital can be curtailed. Further, pursuant to an anti dilution right, in case the company issues shares to any other person at a price lower than the price at which a shareholder who is party to the Shareholders’ Agreement was issued shares, then the shareholder who is party to the Shareholders’ Agreement has the right to receive such additional shares (at no cost to him) so as to reduce the price per share held by him to the same price as that at which shares were issued to the other person. A pre-emptive right obligates the Company to offer any future shares that may be issued, first to the Shareholder (on a pro rate basis) before offering it to any other party and may allow the shareholder to continue maintaining its shareholding percentage in the Company.

4. Management of the Company

The Shareholders’ Agreement can have clauses on who will manage the Company on a day to day basis, how the MD will be appointed and whether company can change or appoint an MD without concurrence of both parties.

5. Threshold Shareholding

The Shareholders’ agreement can also specify a minimum shareholding that a party must have in order to have all the special rights specified in the shareholders agreement.

6. Matters requiring consent of both parties

The Shareholders’ agreement can also specify matters that will require the consent of both parties in general meeting (eg. change in capital structure of the Company, fresh issue of capital, amendment of memorandum and articles of the Company, change in auditors etc.).

7. Indemnification

The Shareholders’ Agreement may require one of the parties (usually the founders or promoters) and/or the Company to indemnify the investing shareholder against any breach of representations and warranties.

8. Non-compete

Usually promoters/founders will be required to undertake that they will not directly or indirectly engage in or be employed by any party, to carry on similar business as the Company. The period of non-compete is usually a matter of negotiation.

9. Information rights

Usually any investing shareholder will insist on certain financial information being made available to such shareholder periodically by the Company, including balance sheets and profit and loss accounts.

The above are only indicative clauses that may be contained in a shareholders’ agreement. It would be advisable to seek the opinion of your legal counsel in respect of any shareholders’ agreement that you may be intending to execute.

Entrepreneurs Rejoice – Startup Tax (GAAR) decision deferred

Arun Prabhudesai — Tue, 08 May 2012 04:49:32 +0000

This is sure to bring smile on the faces of entrepreneurs. The General Anti-Avoidance Rules (GAAR) which threatened to affect the VC’s, angel investors the most has been deferred by Government for a year.

In the Finance bill, it was announced that Funding of startups could be one of the heads classified as an income and was taxable under (GAAR). GAAR was intended to be introduced from April 1, 2011, but there were lot of gray areas as well as fierce opposition from Industry bodies.

Finance Minister, Pranab Mukherjee, in his speech to the Parliament yesterday proposed to exempt angel investments from the purview of the proposed share premium tax. He said:

It has been proposed in the Finance Bill that any consideration received by a closely held company in excess of the fair market value of its shares would be taxable. Considering the concerns raised by ‘angel’ investors who invest in start-up companies, I propose to provide an enabling provision in the Income Tax Act for exemption to a notified class of investors.

This is sure to come as a major boost to entrepreneurial space which threatened angel investments in India!

[source]

5 famous Startup Incubation Centers in India

Kaushambi — Tue, 27 Mar 2012 15:57:00 +0000

Startup Incubation holds significant importance in a country like India where entrepreneurs by the score are launching new setups and changing the game of business by minutes. For the uninitiated, business incubation programs or centers provide support functions, mentorship and resources to individual entrepreneurs or entrepreneurial setups. This enables them to get all the expert advice and technical guidance that they need to survive for a longer time, unlike most other entrepreneurial ventures that fizzle out within a few months of their launch.

Almost every other prestigious B-school today houses an incubation center so that great ideas can be nurtured from their very source. Currently there are about 100 incubation centers supported by the ISBA which is the apex Indian professional body supporting business incubators. Private incubators are a handful, but gradually growing. These numbers are expected to double within the next two years. Let’s take a look at some of the good business incubation centers in India.

Innovation and Entrepreneurship (SINE), IIT Mumbai,

If you’ve heard of Webaroo, Bhugol GIS and SMSGupshup.com, then you must know that these ventures came into existence because they were nurtured and incubated by SINE – the tech incubator housed at IIT Bombay. ThinkLABS Technosolutions, an educational robotics venture, Myzus Technologies and Elnfinitus are amongst some of the famous businesses that SINE has incubated. These startups have been successful in raising venture capital investment after incubation of upto Rs. 3 crore from the market.

Established in 2004, SINE can incubate an average of 15 companies at a time and has an infrastructure spread over 10,000 sq.ft. They still haven’t opened up to external business incubation because ideas from within IIT just don’t stop flowing! To know more, visit their website.

Technopark Technology Business Incubator (T-TBI), Kerala

Established in 2006 with the support of the Government of Kerala, T-TBI offers fully furnished working spaces spread over 15,000 sq.ft, expert opinions and guidance from the industry, marketing and legal management consultancy and financial assistance.

T-TBI has till date successfully incubated about 60 companies and has had a 92 percent success rate. In early 2011, T-TBI was chosen as the world’s best software incubating company and the first Indian organization to have achieved this status. To know more, visit their website.

Indian Angel Network (IAN)

IAN in an equity based business incubator center that gives priority to ventures in the areas of healthcare, gaming and animation cloud computing, retail, mobile VAS, media and entertainment, alternative energy, education and clean technology. It has been established with the support of the National Science & Technology Entrepreneurship Development Board and the Department of Science & Technology of the Government of India.

In addition to the regular functions of a business incubator, the IAN incubator helps startups to get seed funding and pre angel funding through its tie-up with Small Industries Development Bank of India. The IAN also has strategic alliances with DST supported incubators, corporate, R&D labs and many industry associations.

The IAN incubator is particularly famous for the activities it organizes – from its ‘Open Saturdays’ to angel investors meet to workshops for training entrepreneurs. To know more, visit their website.

Centre for Innovation, Incubation and Entrepreneurship (CIIE), IIM Ahmedabad

A business incubator housed at India’s prime business school simply cannot be left out of the list. Having started incubation initiatives since 2007, CIIE has an interesting perspective on why it doesn’t provide physical space for business incubation. They want entrepreneurs to build their ideas from wherever they are stationed, so that the local economy benefits from its growth.

From the time it started, CIIE has incubated more than 50 companies, only a handful of which were owned by IIM students. CIIE has been incubating businesses in the areas of internet and mobile technology, clean technology, social sector startups and healthcare.

From mentoring clinics to art exhibitions from global warming initiatives to social enterprise funds, CIIE has evolved as a prestigious business incubation centre in India. Some of the CIIE’s incubatees are Colored.by, Biosense, Boond, Croak.it, Flick2Know, Ideophone, amongst a host of others. To know more, visit their website.

AngelPrime

AngelPrime was launched recently in 2011 in Bengaluru by well known names in the Indian tech industry like Bala Parathasarathy, Shripati Acharya and Sanjay Swamy. The areas that AngelPrime aims to incubate in are mobile payments, e-commerce and smartphone / tablet apps. It has already begun incubating a mobile payments company and a smartphone and tablet startup.

Unlike the CIIE, AngelPrime believes in incubating their ventures at their office space so that they can be closely monitored. AngelPrime has an edge in its services because the founders bring their previous corporate networks and experiences into incubating new ventures. To know more, visit their website.

Business incubators play a large role in reducing the gap between new products / services in stages of ideation to their commercial rollout. It also provides an equal platform to all entrepreneurs so that they can create products and services that will benefit all sections of the society.

Latest news about Business Incubators in India:

India’s first public-private partnership (PPP) telecom business incubator called Startup Village is being set up in collaboration by The National Science and Technology Entrepreneurship Development Board (NSTEDB), Department of Science and Technology (DST), Technopark and MobME Wireless, reported ET.
The Ministry of Science and Technology cleared a proposal for setting up a Rs. 36 crore biotechnology business incubation center at the University of Pune called the The Science and Technology (Scitech) Park.
The Hubli-Dharwad Municipal Corporation in the North Karnataka region is planning to open an incubation center at the Aryabhata IT Park in Hubli to attract and hone entrepreneurs in the IT sector from Hubli and Dharwad.
In 2012-13, The Ministry of Science and Technology has proposed to set up a Nano Park near the Bengaluru International Airport (BIA). This will host a nano-incubation center, science and technology-based business incubator, physical infrastructure and other support systems.

Startup Buzzwords every Entrepreneur should know [Infographic]

Arun Prabhudesai — Tue, 13 Mar 2012 16:37:05 +0000

Does words like “Freemium” or “Virality” or “Pivot” sound confusing to you? If you are an Entrepreneur, especially in online space you would be familiar with them. These buzzwords are commonplace in Silicon Valley and now very much part of Indian startup scene as well.

Folks at Udemy have put together an awesome infographic called The Founders Dictionary that lists down quite a few of those startup related buzzwords. It is interesting to go through the definitions, especially because some of them really funny as well.

And BTW, Out of all the ones given below, I was not aware of 2 of them. Mock Vortex Principle & Wheelhouse. Check-out yourself to find out how many you know (or don’t know).

[Note: Click on the image below to zoom, which will make it much more readable]

So what’s your score? how many did you know?

8 Categories of Angel Investors

guest — Tue, 28 Feb 2012 04:54:18 +0000

In today’s competitive business world, there are times when you run out of capital funds. The easiest and most convenient source of funding during such times, are the angel investors. This however doesn’t mean that you accept cash from any angel investor. Choosing the right kind of angel investor is also an important consideration.

While there are several kinds of angel investors, they can widely be categorized as –

Return on Investment (ROI) Angels

One thing about ROI angels is that, they invest only when the market is doing well. This is because; such investors are mainly concerned with the financial rewards they will be able to reap given the high-risk investments they make. For the ROI angels each investment is like another significant addition to their already diversified portfolio.

Corporate Angels

These angels are most often former business executives who have either been replaced from large corporations downsized or taken voluntary retirement. While these investors seem to be making investments only for the sake of profitability, they are actually looking for a paid & secured position in the company they are investing in.

High -Tech Angels

Though these investors are less in experience, the investments made by them in modern technology is quite significant. These investors value profitability as much as they value the exhilaration of introducing a novel technology in the market.

Entrepreneurial Angels

These are successful investors who have their own brilliant businesses, which provide them with a steady flow of income for making high-risk investments in start-up companies. While they make all efforts to help entrepreneurs launch their start-ups, they do not actively get involved in the operations of the company.

Core Angels

These are investors with extensive business experience, who have accumulated enormous amount of wealth over extended period of time. One important fact about these investors is that, they usually tend to make high-risk investments in spite of their losses, which adds-up to their diversified portfolio. Core Angels not just make capital investments but also useful knowledge investments.

Professional Angels

Being professionally employed as lawyers, physicians, etc, these angels make investments into companies of their fields. At times, they may invest in several companies simultaneously. Professional angels are extremely valuable for initial capital investments.

Micromanagement Angels

These are considered to be the most serious types of investors. While most of them are born with a silver spoon, most others acquire their wealth through sheer hardwork. These investors usually seek a board position & tend to implicate the business strategies they have incorporated in their own companies into the companies they are investing in.

[This article has been contributed by www.smegetmoney.com – an initiative of SME Networks Pvt Ltd.]

Android apps for Indian Entrepreneurs & Small businesses!

Kaushambi — Sat, 04 Feb 2012 11:44:06 +0000

There are more than a thousand great productivity apps available for smartphones, some Android ones which we have covered previously but this post is going to be of particular interest because we’re going to talk about great Android apps that may be mighty useful for Indian Entrepreneurs. Mind you, the utility of these apps can be extended to other Indian business persons too. The only reason that Indian entrepreneurs would be particularly interested is because they are always on the lookout for cutting costs and finding easier ways to manage their business.

Multi Courier Tracker

Are you running a home office and are breaking your head over tracking multiple couriers? Do you own a factory and have no spare monies to hire someone who could track office parcels and administrative communication in post? Then MCT is your savior. This app allows you to track multiple couriers in India with ease. Currently, they support six popular courier services such as Aramex, Blue Dart, First Flight, Professional, DTDC and TNT. The app makers claim that entrepreneurs and individual sellers who buy and sell a lot over Ebay, Flipkart and other Indian portals will find it very useful. This app awaits more number of downloads and reviews, but the concept is sure worth a shot.

Download Now

India Business Resource

“India Business Resource” is a Free app that consists of several important business tools in one package. It has financial calculators that compute income tax, EMIs on loan amount and property rates, and informative guide about ATM / Bank Branches, MCD circle rates of different Colonies in Delhi and Business News in India. The app also allows designing your custom visiting cards. This recently launched application by MapsofIndia is sort of a Swiss-knife for all your business needs!

Download Now

VAT Calculator

For those Indian entrepreneurs who have just started out in the commodities and services business and don’t have elaborate account departments to produce before and after VAT figures for them, the VAT Calculator can come to heed. Currently, this app works with VAT rates of European countries and India and you can also update your app to 2012 VAT rate figures. The calculated VAT figures will be displayed in rounded and two decimal values. This app sports a high download figure and a good user rating.

Download Now

inStocks BSE/NSE Stock Markets

This app claims to be the most download, comprehensive and highest rated app on the Indian stock market on Android. As an entrepreneur or a business person, even if you are not into trading yourself, keeping a tab on the movements in the domestic and international financial markets becomes imperative. From BSE and NSE Stock Markets Live, business news, stock tips, the Nifty, the Sensex, equity and NSE futures and options, BSE and NSE intraday charts to stock quotes of Indian companies, this app will allow you to stay on top of the bulls and bears.

There’s also a similar app called Moneycontrol Markets on Mobile for Indian stocks, but the user reviews for this app shout out many problems in its interface and loading. On the other hand, inStocks has garnered some great user reviews.

Download Now

City Navigators

If you are a business person whizzing from one metro of India to the other or are doing business with people of other cities, a few useful apps such as the Meru Cab app, the Delhi Metro Navigator app and the Meter Down app that we’ve featured before, will be very useful in terms of handy information and cost cutting. Are you a Mumbaikar attending a meeting in Bangalore? Get all the information including fares, parking fee info and an offline route map through the Bangalore Metro Navigator. Do you have to entertain international guests from the hotel to the airport in Hyderabad? Book a Meru cab for them. Indian entrepreneurs and business people have to make money by saving time too, right?

Let us know if you know of any apps that are mighty useful to Indian Entrepreneurs as well!

The 6 ‘I’s of Innovation!

guest — Mon, 30 Jan 2012 04:42:25 +0000

What is the first thing that comes to your mind when posed with the question

“What is Innovation”?

Some would say that innovation is something new and useful; some would say that something that solves the problem in the most efficient manner is an innovation; some others would say that something that is way ahead of its time is an innovation. Indeed, they are all true. But for an entrepreneur like me, innovation simply means what is shown in the figure.

Innovation is different from invention in the sense that innovation is the commercialization of an invention. Anything that is only useful to you and can’t be used by others is not an innovation. Innovation can be in 5 forms:

New Product
New Process
New Markets
New Way of Organizing Business
New Sources of Supply

Here we see the process of innovation in form of six ‘I’s:

Inspiration

Innovation is not merely a lucky flash of inspiration but, surely, behind every innovation lies an inspiration – be it from living or non-living, live or dead, your daily routine or problems facing the world. If you don’t get an inspiration, create one. Ask yourself questions like “Why do we do a certain thing in a certain manner only”, “What if I were the consumer of my own product”, “How can I reduce cost or increase profits”, etc.

Ratan Tata said quoting the world’s cheapest car, Nano, at a symposium at Cornell University, “What really motivated me, and sparked a desire to produce such a vehicle, was constantly seeing Indian families riding on scooters, four or five on a scooter, maybe the child sandwiched between the mother and father, riding to wherever they were going, often on slippery roads in the dark." This concern kept him going and the result has won him many accolades.

Ideation

Inspiration leads to ideation and brainstorming. Ideation is the creative process of generating and developing new ideas so as to convert your inspiration into innovation. Brainstorming with wise people is probably the best tool to check whether an idea is worthy. And sometimes, the idea may face criticism or turn out to be a source of laughter.

When Steve Jobs thought of making a phone with only one button, his engineers kept telling him that it was impossible for a phone to have only one button. You could not turn it on and off, control the volume, switch between functions and go on the Internet, if you had only a single control button. Steve Jobs was deaf to their complaints and would only say “Figure it out”. The result we all know – iPhone!!!

Initiation

It requires a great deal of courage to initiate. Many a times, people start working on a good idea but leave it in between because of initial failures. Only passion and dedication to the original inspiration can keep one hooked on to the idea. In the course, one might need to change the strategy and sometimes the idea itself.

Myspace, hi5 and Orkut came before Facebook was launched. Today, even the combined user base of all these three networking sites is way less than Facebook’s more than 800 million users. Facebook came with simpler features and constantly kept updating features. It allowed support for third-party applications, video calling in collaboration with Skype, the recent Timeline feature, etc. We don’t find all these together in other sites. It’s easier to find old-friends on Facebook than on other sites.

Invention

Finally the idea that came out because of the inspiration sees the day of the light. This invention might undergo many revisions before it is made available to the public. It may either get appreciation or admonition. Marketing efforts would be involved to make people know about this invention and hence commercialization of the invention is still a step away.

Windshield wipers were invented by real estate developer and rancher Mary Anderson. She lived in New York and noticed that the trolley car which she rode had an open front windshield. Although the open window was necessary to allow the driver to see the road under falling rain or snow but it was a pain for the passengers freezing inside. She invented windshield wiper featuring a rubber blade connected to a spring-loaded arm that could move across the windshield to clear snow, ice and rain. She patented it and attempted to sell the rights. However, her potential buyer didn’t feel the idea would ever amount to anything and declined. Today it’s difficult to find any four-wheeler without windshield wipers!!

Income Generation

Not all ideas that are turned into inventions make money. Some may fail disastrously and some may pave way for newer inventions. Some inventions make money by targeting a niche while others make by targeting the common masses.

We all credit Thomas Edison with the invention of electric light bulb (in 1879). But little do we know that the first electric light was invented by English scientist Humphry Davy in 1800 but it couldn’t be commercialized. After many people tried during these eight decades, Thomas Edison tried thousands of different filaments to find just the right materials to glow well and last long. He once said, “I have not failed. I have found 10,000 ways that won’t work”. In his first successful test, he was able to invent a bulb that could last for 13.5 hours and eventually developed a bulb that could last for over 1200 hours. On commercialisation he said,

“Anything that won’t sell, I don’t want to invent. Its sale is proof of utility, and utility is success.”

Improvement

An organization that constantly strives to be innovative finds that, in time, what was once an innovation is obsolete now. The organisation may seek to bring continuous improvements to this product / service or completely abandon the same and move on to doing something new. The process of innovation in the form of six ‘I’s is repeated.

For millions of poor Indians, cataract meant blindness until Aravind eye care hospital came into being. Cataract operation in the US costs around $2500 to $3000 and even in an Indian hospital the cost comes to around $300. For a country like India where most people, especially in rural areas, live on less than $2 a day such a price is not affordable. This led Aravind eye care to devise an operation to treat patients for an average of $25, while treating almost 60% patients for free. Today, it’s the largest and the most productive eye care facility in the world. They gradually shifted from being just hospitals to eye care systems by having a dedicated factory for producing lenses, a training centre to provide key skills, specialist ophthalmic research centres, and an international eye bank.

If you just take time to think how things can be changed, innovations can happen.

[This guest post is written by Ashish Chowdhary. An entrepreneur himself, he has deep interest in cutting-edge Technology, Entrepreneurship, Mobile Apps & Innovation]

How some start-ups used innovative methods to promote themselves?

Dr Vikram Venkateswaran — Mon, 23 Jan 2012 06:30:26 +0000

After last week’s article on ‘Why some starts up survive while most fail’, some of you had written to me to elaborate on point number 5, i.e:- Innovative promotional strategies used.

Well it is difficult to capture all this in an article as this topic would require an entire book, but still it got me thinking and I have made a list of three such instances that I feel really stood out.

Using College girls as demand generators - Karsan Bhai Patel is a tough competitor. Not only did he launch an Indian brand, Nirma to take on the likes of Hindustan Uni Lever (HUL) but he briefly overtook them. So much that HUL started a project called STING (Strategy to inhibit Nirma growth). Now in the early days the demand for Nirma was good but the retailers were wary to stock them which was partly because of the pressure applied by HUL sales mechanism.

Karsan Bhai started this novel scheme of asking college going girls to walk into retailers and ask for Nirma. If Nirma was not there they simplify left the shop without buying anything. If Nirma was present they bought it and then were refunded for their effort. This dramatically changed the situation with retailers as they started stocking Nirma due to the demand. Soon Nirma was a national brand and pushing HUL and Procter & Gamble into a three way fight.

Non Animal testing and the environment- Bodyshop may be a premium brand today, but when it started Anita Roddick the founder was really pushed all the way by mainstream cosmetic chains in the UK. She then decided to come up with a very daring promotional scheme where she openly declared that none of her products were tested on animals. To push it further she also gave a 30 % discount to all those who brought back empty bottles of BodyShop products in order to get a refill. Now this was long before the environment became a very hot topic and Al Gore became the first carbon billionaire. But the strategy worked and soon she had a set of loyal customers who became evangelists. The rest is history. Though BodyShop today is part of L’oreal they still continue to promote non animal testing and environment friendly practices.

You meet the nicest people on a Honda- Honda motors was an established name in Japan but hardly anyone knew them in the US. The Japanese ministry for Manufacturing had advised Honda to look at Indonesia but they had ambitions in the US. Knowing that GM and Ford would shut them down in they entered the US with cars, Honda entered the country with a moped called the ‘Super Cub’. It was supposed to be sports moped, which people could take to a golf course or to tennis club. The launch state was California, which normally has good weather throughout the year. The tag line was that ‘you would meet the nicest people on a Honda’.

The moped was sold through sports shops like SEARS. Honda gifted a Moped to all its employees and they were encouraged to drive to work in their mopeds. This soon created a buzz with many of the younger more sporty Californians wanting to buy one for themselves. The strategy worked and Honda soon became a familiar brand on the Californian roads. This paved the way in the 1980’s for the Honda invasion through their cars. Though Honda was not a start-up they used the start up mentality to get better of bigger rivals like Ford.

But again this is no way an exhaustive list there have been so many other innovative ideas for promotion. I would like to hear your views on the same.

If you have started a company and used very innovative strategies or have heard of someone doing so, please do leave a comment and that would really enhance the discussion.