November 28, 2006

Building a Good Board

Fred Wilson has some suggestions:

1 – Have at least one founder on the board. Many VCs like to move the founders out of the way. They think they will be difficult and meddle. That’s always a risk, but the benefit of having founders on the board vastly outweighs any downside in my mind. Having too many founders on the board is bad too. You want a diverse set of people on your board, not any one concentrated group.

2 – Keep the number of VCs on the board to two or three. The number of VCs on the board is in inverse proportion to the success of the deal.

3 – Local board members are better. They will come to the meetings. Avoid too many board members who live elsewhere. They’ll call into the meetings. Trust me. And that sucks.

4 – Have at least one and ideally two industry insiders on the board who are independent of the founders and the VCs. They should bring operating experience. They should be mentors to the CEO. They should be local so they come to the meetings.

The Internet of Things

Business Week has an interview with British Telecom’s resident futurologist Robin Mannings:

Welcome to the so-called ‘internet of things’ which will replace today’s internet of people and data. Everyday items from TVs to toothbrushes, sports equipment and even buildings will have in-built computing power and wireless that will allow them to communicate and share information.

Current rollouts of RFID tagging will be dwarfed by the future development of sensor networks, according to Robin Mannings, BT futurologist and research foresight manager.

He told silicon.com: “RFID is just the tip of the iceberg and the iceberg is ubiquitous computing – more or less everything being a computer.”

Telecom Bundles

The World In 2007 (from the Economist) writes:

As a result, firms that used to be in separate industriestelephone operators, internet service providers and cable-TV companieshave all suddenly found themselves in the same business. Cable companies now offer broadband internet and voice services over networks that used to carry just television; telecoms firms have responded by upgrading their networks to carry television signals; and internet service providers have branched out into telephone and video services. In the new converged world, any firm that can deliver high-speed data to customers over its network can offer any or all of these services. And offering all of them together in a bundle is thought to be a winning strategy. The ultimate bundle is called the quadruple playthe combination of fixed and mobile telephony, broadband internet access and multichannel television. If your telephone company and a host of rivals are not already offering you such a bundle, you can be sure that they will start to do so in 2007.

The YouTube Effect

Wired writes that TV advertising is broken, putting $67 billion up for grabs.

The digital revolution is equally terrifying to Madison Avenue, which has been footing the bill for Gilligan’s Island, The New Republic, The Family Circus, Rush Limbaugh, TRL, and The Wall Street Journal forever. Until now, advertisers have underwritten mass media to reach mass audiences. Indeed, they’ve paid increasing premiums for the opportunity as audiences have shrunk, because even in a fragmented media world, the largest fragment network TV is the most valuable. But now they realize that they are losing not only mass but critical mass.

They see the old model collapsing before them, and they have $67 billion to spend and no idea where to spend it. Because, at least until recently, the Internet has lacked both the riveting content and ad space inventory to absorb it. But what if there were a means to approximate the reach and mesmerizing power of television online? What if there were a medium with not only the grip of TV but the vast scale to absorb all those ad dollars? And what if, as a bonus, the medium were able not merely to command eyeballs for marketers but to target content especially relevant to what the marketer is selling?

Talent War

Venture Beat has a column by Auren Hoffman who writes that the big high-tech companies are losing the talent war:

Big companies are losing their A players and theyre struggling to attract B players. In an industry where everything is about people, large tech companies are in trouble because they are losing the talent war. And keep in mind, an A player in an organization can usually produce the same results as three B players.
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At a big company youre stuck with corporate politics, paralysis decision making, and a lack of getting things done. At a small company youre having fun, pursuing your dream, and actually getting things done.

TECH TALK: 15 Years as an Entrepreneur: 1994-99

It was in November 1994 that I made the decision to switch tracks from trying to build a software services company to one which could create content and a marketplace for Indians globally on the Internet. My confidence was low, but I had little to lose. I had to pick up the pieces from a failed past and look ahead to the future. I saw in the Internet an opportunity to do something different. During those rough and tough months, I did not once think of giving up being an entrepreneur. It was that initial period which taught me that one has to be focused on the journey, not just the destination. Things rarely go according to plan, but that doesn’t mean one must stop dreaming and doing.

The IndiaWorld journey lasted five years. During that period, with help from my wife and a committed staff, we built up India’s first and largest Internet portal. The portal was launched in March 1995. This time around, I was careful to ensure that we also had a source of revenue which came from doing websites for various companies. We kept costs low and very soon, we were profitable.

When I look back at those five years now, it was an amazing ride. We did a lot with limited resources. We made more right decisions than wrong ones. We were also lucky on numerous occasions. For small businesses, any decision can be fatal and a bit of luck is needed to ensure that the scales tip on the right side. The learnings from the past definitely helped in the right decisions that I made.

There were two things which I did not succeed in during that period raising external capital for growth, and building an organisation capable of scaling up. In November 1999, when I sold the business to Sify (then Satyam Infoway), we were 20 people with a revenue run rate of about Rs 5 crore ($1 million). It was an organisation still largely driven by me with limited delegation of authority. Getting in new people would have meant raising capital the profits in the business were not enough to scale up. In fact, there is almost a chasm between the ‘seed’ stage of a business and a ‘scaled business.’ It requires capital and organisational bandwidth to cross the chasm. I did not succeed in doing that in IndiaWorld. It is a weakness that persists to this day and one I can hopefully overcome going ahead.

In the end, when I made the decision to sell IndiaWorld in November 1999, it was not an easy one. I had not created the business with an intention to cash out. For five years, IndiaWorld was the only life I ever had. But as I spoke to a few close friends, two things become clear. In business, it is important to know not just when to enter, but also when to exit. Also, by nature, my strength lay in taking new ideas and building new businesses, rather than sustaining existing ones. With this in mind, I decided to sell. That was my first (and to date only) entrepreneurial success.

Tomorrow: 2000-4

Continue reading TECH TALK: 15 Years as an Entrepreneur: 1994-99