Guest writer:

The program I’m doing this year, Opera Academy of California, is presenting a summer line up for pre-professional singers – including a series of master classes, five nights of selected opera scenes and three full operas – for the first time. This is a new venture, with a relatively small group and limited funding: this is a bootstrapped startup, but this is precisely what makes taking part in this project so exhilarating.

Discovering entrepreneurship… Because the group is relatively small, our six weeks are plenty packed. More is required of us as students, both on and off the stage. All of us are singing numerous roles, in multiple scenes and operas, so we have to be organized and pace ourselves. There is not an extensive staff infrastructure, so we help to organize some of the logistics and are more responsible for extra-musical aspects of the productions. We can’t simply show up and rely on a large construct to take care of our needs. But this is a tremendous opportunity for us to invest much more of ourselves than simply our voices and stage presence. We are learning something critical: entrepreneurship. Especially in this economy and with the current state of arts funding, many of the projects we will undertake as young musicians will be held together by two strings, a prayer and a lot of hard work. Many people are telling us to be more entrepreneurial: this is it. We are forced to think beyond our individual musical lines and scenes. We are far more directly responsible for the outcome of the program as a whole than if we had opted for a larger, well-established structure.

… And empowerment: The experience is empowering. Assuming we do invest psychologically and understand how much of an impact we can have in the shaping the success of OAC’s Summer Program (and by extension its usefulness on our resumés), this is a terrific opportunity to learn and create as part of a team. This requires a good deal of dedication on our parts, as well as flexibility and evangelism – in fact, the qualities needed for any start-up venture. Without an overabundance of people, we have to take on more responsibility. Without returning spectators, we have to build our own audience base, through Facebook, Twitter, etc… Without built-in cost coverage and donor lists, we have to bootstrap funds (I organized a fundraiser at the end of May in Palo Alto, and another one is in the works). If you’ve ever seen somebody start a company, this is probably sounding rather familiar… This program is new, and most problems have to be addressed as they arrive, but when a startup is set in motion by a professional, as is Yefim Maizel, you realize that being “lean,” as they say it in startup jargon, does not mean creating a cheap result. Elegance is not always expensive when you have a reserve of imagination and an eye for the right thing. I remember reading in one of Guy Kawasaki’s books “A players attract A players.” OAC has launched its first summer season with an impressive and diverse group of contributors – both in terms of faculty and students who will be instrumental in its success.

Come and listen to us! Our events are listed on the Opera Academy calendar!

Sramana Mitra, a Silicon Valley entrepreneur and strategy consultant founded the 1M by 1M(One Million by One Million) program, “a framework for Capitalism 2.0,” she says, and which she “envisions as a distributed, democratic capitalism.” Here is what this means: Not everybody can, or even needs to, come to Silicon Valley to create a company. There are creative entrepreneurs everywhere in the world, and they can succeed from virtually any place depending on the nature and the scope of what they undertake or on their own definition of success. Yet, where can they get accessible economic development tools? In other words, how can entrepreneurship education be democratized? Sramana’s 1M by 1M (One Million by One Million) brings a solution.

Startup America and Startup Anywhere: Check out the 1M by 1M program: While different countries and regions have started thousands of initiatives to rekindle the economy through innovation and entrepreneurship, one of the most critical needs is ensuring that entrepreneurs do not waste time and energy reinventing the wheel, or money they may not have in MBA programs or expensive consultants. The 1M by 1M program provides all the basics to start on the right footing at virtually no cost: “We offer a case-study-based online educational program, video lectures, and methodology, online strategy consulting at public and private online roundtables, as well as introductions to customers, channel partners and investors (pre-seed, seed, angel, VC, bank, alternative financing). The public roundtable is a free program accessible from anywhere in the world. The rest of the services are for paying members only.” The $1000 annual fee grants paying members unlimited usage of the service (just don’t abuse the system!). For a full explanation of why Sramana created  this program, also consult this video.

What I like about this program:

Its “weapon of massive reconstruction” optimism:  As Sramana puts it: “It is the entrepreneurs, and the entrepreneurs alone, who wield the most potent weapons of mass reconstruction. To build markets; to build nations; to build worlds.” One million by one million makes one trillion of whatever currency, and even if it is as hard to represent as one terawatt, it expresses the human power to change the world for the better — and create jobs.

Its pragmatic “virtual incubator” approach: Sramana has spent years talking with entrepreneurs, capturing their stories. Some of her stories she shares in her books*, but hundreds more are available as case studies from which entrepreneurs can learn. Innovative ideas evolve with time, but business model innovations come at a much slower pace – and the principles for capital efficiency, effective bootstrapping, customer validation, and positioning are not going to change overnight. The 1M by 1M program is a virtual and scalable incubator that can help scores of entrepreneurs get their act together at a low cost and in no time, wherever they are located in the world.  As a virtual incubator, 1M by 1M supplements physical incubators and has partnerships with a few of them already, as well as with corporate sponsors. For example, in March, 1M by 1M announced that it was working with Microsoft on their India Startup Challenge — with Microsoft BizSpark offering $100,000 in total grant to four startups with winning ideas in the Cloud & Mobile categories.

Its inclusiveness: Physical incubators, even the largest, can only host a limited number of companies, which means that the vast majority of entrepreneurs are on their own for all sorts of reasons. 1M by 1M doesn’t have to select or exclude entrepreneurs to function, and thus can accept companies regardless of their prospective TAM or the speed at which the business will grow. Small niche businesses are the economy operating system of the world, and yes, any small business owner can benefit from being trained. As a matter of fact, the program heavily focuses on bootstrapping and leadership (something useful to entrepreneurs with larger ambitions, anyway). 1M by 1M is a fully international social network of entrepreneurs (they only have to be able to speak/understand English). Changing the world for the better is a collective effort, where each entrepreneur defines his/her vision of effectiveness, while benefiting from sharing lessons learned.

Conclusion: Read Guy Kawasaki’s The Art of the Start and a few other good books, including the ones that Sramana wrote, and join 1M by 1M. It’s a great way to start off, even if you have the type of business or you are in a place that allows you to apply for a physical incubator (in such case, you will benefit from this incubator even more!).

* Books by Sramana Mitra:

• Entrepreneur Journeys Volume 1
• Entrepreneur Journeys: Bootstrapping: Weapon Of Mass Reconstruction (Volume 2)
• Entrepreneur Journeys v.3: Positioning: How To Test, Validate, And Bring Your Idea To Market (Volume 3)
• Entrepreneur Journeys v.4 : Innovation: Need Of the Hour (Volume 4)
• Vision India 2020

How bad is it for startups seeking financing? This is the title of a post by Jeremy Liew on November 24^th[1]. Well, it’s bad and as usual, Jeremy Liew says it pretty much like it is:

1. Angel financing had dried;
2. A slowing economy has reduced near term revenue growth expectations;
3. Venture Capitalists are focusing on their portfolio companies.

Jeremy Liew ends his piece on a more positive note: there will be “better times ahead.” When? I would not bet that it is any time soon. So, brace for the worst (you can only be pleasantly surprised, after all), and bootstrap! If you have already secured a first round of financing, consider putting on the bootstrapper’s boots and live as if no second round was to come in the near future. So, here is my two cents piece of advice for today:

Build the leanest possible organization

If you are an early startup with little to no money (your credit card and the charitable contribution of your loved ones), get people to work for equity. Given that not everybody can live on love, fresh air and savings, find a bunch of friends or friends or friends who have a day job and are committed to working with you from 6:00 PM to 10 PM during the week and most of the weekend. These 30-40 hours are about half the number of hours that an employee must put on in a startup. My friend Bernard Gallet, one of the most brilliant programmers (and CTO of several companies) I had in my career, also reminds you that you should not discard what companies such as Rent-A-Coder or Elance offer for a reasonable fee if you have a small budget. Do not expect them to design your product, of course, but they can be a useful resource for specific capabilities that do not require access to the entire source code, interfaces or utilities. Also leverage the huge amount of open source available out there! The end result is that if you really believe in your project (and make others believe in it), you will be just fine. Make sure, though, that your employees’ partners (or your own partner) embrace this lifestyle. Otherwise, you are in for counterproductive tensions and conflicts that can be deadly for startups.

No matter how tiny the team may be, operate as a full-fledged company with regular coordination meetings and a pervasive sense of accountability: Have a real board of advisors, a real board of directors, a bookkeeper one or two hours per month (lots of startups tend to neglect this aspect because there is not much to compute, which is a bad idea), and a corporate attorney (you do not need much either, but be always clean and many good firms differ payments for young startups). Also, immediately buy all relevant domain names and trademarks even if your headquarters are your basement.

Remark: If you are a funded young company, even if you have a decent cash runway (I recommend six months at all times with virtually no new sales), also live the lean life, even if you believe that the company is not threatened. In fact, it is a perfect time to resume a pre-funding spirit (most of what I say above and below applies), refocus energies and remove people you feel are not busy 150% of the time. If your runway is less than six months, reduce your headcount and your expenses so that you remain constantly at this security level. I neglected to do this in one of the companies where I was the CEO and I did regret it. The risk that you will be overwhelmed by customers’ demands is extremely low.

The landscape is likely to worsen. The companies that will win are the ones that will outlast their competitors, not the ones that believe that they must “grab market shares” as if there were no tomorrow (such frantic mindset can be a sure method to jeopardize tomorrows actually).

Generate revenue

It has become customary to create an early product, show “some” traction and then look for money to move the company forward. What if you simply delayed your exhausting quest for VCs or angels and spent your time actively generating some revenue? Finding money to fund actual growth, even when it is modest, is easier than looking for money to fund ideas or prototypes.

You may scratch your head because this is not the strategy you envisioned. Think twice. For example, if you planned to create a base of millions of users considering that there are “metrics” other than cold, hard cash, be open to an about-face. Why not forget, at least temporarily, about the alternative metrics or potential buyers interested in acquiring rolling eye-balls or targeted bustling social networks? Acquirers are also impacted by the recession and will be less prone to buying you for zillions. Their most reasonable strategy will be to let your assets smoothly wind up into their hands for peanuts. Remember, in a bad economy, the whole point is to last constructively. So make money!

Stop thinking of business models that do not yield immediate revenue. The most prosaic modus operandi for start-ups or young companies is to be opportunistic – call this a “multi-pronged business model” if you want to sound less of an earthling. True, some VCs may look at this approach somewhat warily, but not all of them. VCs who have created companies before the Internet bubble will respect you, be interested in seeing how you fare under tough circumstances, like your sense of survival, and might be open to assist you faster than you think (if you want them to do so). So how do you make “opportunistic” revenues? Here below is a reminder of the two simplest methods for you to discuss with your labor camp’s pals:

• If you are a traditional software company, scale down the number of features planned for the first release and sell consulting services associated with the alpha/beta version of your scaled-down product. It’s a good deal for everybody. Your customers get something adapted to their needs, and you learn from them what they actually need (which may be slightly different from your initial grand vision). You will also come to the conclusion that your product should be more user-customizable than what it is currently. Become a “product company” only when you feel you have reached a reasonable level of sales predictability. For complex pieces of software, selling training is also a very good way to generate cash. Stay away from the big deals that take forever to negotiate (unless you are paid for consulting services during the same time). Remember, you want cash now.

• If you are a webware company, try to set your sight below the B2C castles in the clouds and look at the landscape with your feet on the ground. Most innovative B2C webwares can also be positioned as B2B2C products and, thus, have a stronger reach and value within a B2B2C architecture. Look at it this way: 1) You don’t have the money to “buy” users; 2) virality is not always miraculously fast if you are not a celebrity and 3) ad-generated revenue are notoriously slow to come because of 1) and 2). So if your product is of interest to users going to your site, it should also of interest to users going to other sites that already have users. In short, if your product is useful, you will find customers. You may even find customers who will pay you for consulting services to help them design (technically and strategically) an optimal integration of your widget within their environment.

• In both cases, also look at niches – roughly speaking, at markets that seem unglamorous, may only be a few hundred millions dollars opportunity or even much less, and are allegedly of no interest to VCs (which is not necessarily true). The reality is that there are customers there that could need you and your ideas even in tough economic times (and possibly because of the recession). You will be able to refine your product away from the noise, later consider other “niches” and get larger when you feel that you have the financial stamina to scale – then, VCs will believe you when you tell them that your platform transparently spans multiple industry domains).

Sramana Mitra (left) presented her book at the invitation of T.M. Ravi (center, with his wife Francine) and Patrick Consorti (right).

When you start a book, there are always a few words that make you want to read on. I like the way Sramana Mitra describes her goal with ”Entrepreneur Journeys.” She wants “to capture that tribal knowledge accumulated in the private lives of great entrepreneurs.” Although it is now common lingo, even with Six Sigma pundits, I still love the notion of “tribal knowledge.” While it is true that nothing completely new can be said about how to build a company, there will never be enough books recounting the actual experience of entrepreneurs. Yes, it is hard and challenging, but there are entrepreneurs starting companies everyday, because, as Sramana says, being an entrepreneur is “more than a career, it is a way of life.”

Sramana interviews twelve entrepreneurs, whom she presents through five sections:

• Bootstrapping
• Taking on Giants
• Disrupting Business Models
• Addressing Unmet Market Needs
• Tackling Planet Scale Problems

Her choices are excellent. She does not tell us for the umpteenth time the epic tale of the legendary heroes haunting our California shores, but rather focuses on the occasionally complex rides of sometimes lesser known, yet highly successful entrepreneurs. 

Sramana starts with two bootstrappers. Still quite a legitimate breed of people, maybe even more so these days. Some people love to take tough paths, for various reasons, at least during the foundational years of the company. The phenomenal success of Jerry Rawls, co-founder and CEO of Finisar, a leader in optical components or the pragmatic nimbleness of Sridhar Vembu, founder and CEO of AdventNet (and creator of the productivity suite Zoho) are equally inspiring. They chose routes that VCs generally do not like, such as starting products through consulting or operating on mixed business models; key to their success is a survival instinct and the intimate conviction that failing is not an option.

The founders of VC-backed companies selected by Sramana, are not less gutsy, though. In addition to a shrewd Web 3.0-type approach, the strength of Steve Hafner from Kayak is an unwavering common sense: ”Build a great technology, syndicate that out to other affiliates like AOL, who already have an audience and then keep innovating on the product to make folks come back to you directly” – and also keep your eyes on the right ratios, especially if you aim at “taking on giants.” The same reasonableness (I would even speak of “serial reasonableness”) is key to the various successes of Gautam Godhwani (founder of ArtWeb, the India Community Center, and, more recently, SimplyHired) and of Russ Fradin, founder of Adify, recently acquired by Cox.

Philippe Courtot, Founder and CEO of Qualys

They all disturb the world order in a way, but all are as level-headed as they are undaunted and venturesome. This is the reason behind the growth of Qualys, the company of Philippe Courtot, who has the indomitable energy of a legionnaire. Incidentally, they must also be able to reconsider their entire business model to continue to make a difference, hence the extraordinary recovery of Steve Singh’s Concur: “You must confront the issues that exist in your business as soon as humanly possible, and solve them,” Singh comments.

What comes out of most of Sramana’s interviews is the solid determination of all of these companies’ founders, as well as their courage through the ups or downs or challenges. The very existence of Marcos Galparin’s MercadoLibre is somewhat of an exploit. Finding money for HotChalk, the first free online community to connect pre K-12 teachers, students and parents did require from Edward Fields the resolution of a missionary. To put it mildly, Energy Recovery Incorporated may never be an easy ride for Hans Peter Michelet, no matter how many accolades he keeps on receiving. Yet, and although, Carol Realini from Obopay admits that “big ideas are very hard to fund,” she did find money. The final word belongs to Harish Hande, the social entrepreneur of Selco, which provides reliable energy service in rural areas in India: ” There is no short cut to creating good processes.”

Conclusion: Read this book. Sramana is a remarkable interviewer, both knowledgeable and very smooth. She introduces you to real people, with real businesses and offers you a genuine perspective of what it’s like to be a entrepreneur. You may know some of it if you are already one, yet it does not hurt to listen to other people to better/further analyze one’s personal experience.

BTW – This book is Volume 1. I will keep you posted when Volume 2 is out!

Marylene Delbourg-Delphis