In recent days, while working with the MVP portfolio companies and reflecting back on the days of madhouse, we have identified this phenomenon we are calling ’startup madness’.

It’s visible and present from the time when you start thinking of your million dollar/world changing idea to the steady state point (personal satisfaction, acquisition, IPO or maybe shutdown). Things that you do, don’t make any sense to outsiders and they are like ‘This guy is crazy’ and even when you look back at that period you think “what was I thinking when I did this?”

Looking back at the time when we got the idea to start madhouse, we did not know anything about business, we were just two 27 year old kids (later three of us, with Ankur joining us). We had tried a variety of things in our lives and had managed to do reasonably well in whatever we put our hands into, may be that’s what gave us the stupid confidence. Very importantly we were quite ignorant about ‘real business’ and hence came up with our own take on every business problem we faced.

This streak of startup madness showed at various places:

• We did not hear NO:  not from vendors, not from people we were trying to hire, not from investors, customers, no one. A NO just meant we had to come back with new ideas and try again.
• We would never get tired of talking about madhouse and we could talk to any one about it. Most times the other guy did not give a damn ,  for him/her it was just a blabber
• We just worked non-stop for three years , not even a day off (except when forced by illness)
• Other than work everything else was just plain unimportant : sleeping, eating, meeting friends, attending social functions, family, watching TV, movies, newspaper – all of this had very little place in our lives. We just filled all our day with work with average working day of 16-18 hrs all thru.
• We worked out of anywhere and everywhere.  Our tools were a Fujitsu laptop and a CDMA phone which could be used like a modem.  Restaurants, inside a car / train / auto rickshaw / bus, out on the road, in the park, bedroom, living room and the loo, locations stopped to matter, where place was work place.
• We did not need a lot of money to live and we were happier than ever (no purchases of over 1000 for 3 years, eating at economical places, shamelessly staying with friends / relatives / acquaintances in cities we visited on work )
• ‘The world impossible was missing” - we just did not believe that there was any problem that we could not solve or anything we could not do. Our minds were one track – focus hard, think hard, work hard and just do whatever it takes.
• We had access to this inhuman energy that allowed us to just keep going – “never get tired” or “never run out of steam”.
• Each time we met a new person, we were constantly thinking of how this person can help our venture, . Everywhere we went, we explored if there was something there that could benefit our startup. Frankly we were classical ‘opportunity hounds” and quite shamelessly so
• We were basically “stuck” in our own world in which we could not fail. While we adapted like crazy, we sort of forced business to work the way we thought it should work, without caring a lot about the outside world.

This madness is the essence of start-ups; it signifies the purity of a startup. It makes the startup tick and makes it successful and enjoyable. The same madness makes you innovate, over perform, challenge your skill set, think out of the box or even out of the world, take 28 hrs out of a 24 hrs a day, it gets you to focus but does not let you  blindly focus!

Its also important to figure out how can you keep re-fueling the desire, the madness, so that it lasts forever, not just for days, weeks or months, start ups that click need to be at it for years. For an individual or team to succeed as a startup, having the startup madness is a must.

If you are an entrepreneur look inside you and make an honest assessment. Do you have the streak?

• If yes, great.
• If no. But you think you can build it – nice, go ahead and do it at the highest priority.
• If you don’t have it and you can’t build it – I am not sure you should continue being an entrepreneur.

On that other hand, if you are not yet an entrepreneur you should also look inside you and make the same honest assessment. Do I have the mad streak?

• If yes, you fool, leave your job right now – the world of ’startup madness’ is calling
• If no, it would best for you to avoid the path of entrepreneurship, until the ‘madness streak’ gets to you

There was an internal discussion between our portfolio companies about “free press release sites” and their effectiveness. I thought it will be a good idea to share the learning with readers of this blog . Thanks to Sahil and Himanshu for  initiating and contributing

Question: There are so many free press release sites out there on the web. Are they effective? Or should you use a paid service like prweb? Any experiences?

Answer: We have been doing a few press releases. Our experience has been really good with some selective free ones. Some of them are very effective and automatically pulled by lots of other websites building a number of links for you.

Also, we found that its better to explore some relevant sites/communities/networks/forums/wikis for “quality traffic”. For example, we get some really good users from one of the vertically focused social networking site.

Here are some points to think about:

• Are they better at identifying future trends and making targeted investments?
• Are they better connected and better able to create M&As?
• Are they more gifted at actively contributing to manage the growth of the portfolio companies?
• Are they more aggressive at marketing their portfolio companies?

Jason / Michael and bunch of other folks have been talking about kind of culture startups should have, to be able to save every penny and march towards success.

As we all know people are the the most fundamental ingredients for every startup and everything else is the function of the kind of people you have.

Based on my experiences, one of the biggest and sustainable cost/time saving can come from hiring the right kind of people (or firing the wrong ones).

Within a team (or the company) there are two types of goals:

• Team goals
• Personal goals

There are bound to be times when team goals and personal goals will conflict. You want to have people who will 90% of the time go with team goals. Get these people and keep them (no matter what it takes).If you have people who are always picking personal goals over the team goals, spot them, provide them the feedback , if they dont shape up – FIRE THEM.

This post was jointly written by Sameer and Nandini

Many entrepreneurs working on new ideas, seem to live with this assumption that Idea Sharing = Idea Stealing. That is, if I as an entrepreneur share my idea with others, they will steal it and make it their own. Garnering this notion, they fail to share details of their project, about what solution they are building or which the real problem they are solving. This does not give an opportunity for the person on the other side, however competent he is, to give constructive feedback or be the devil’s advocate. Hence, entrepreneurs may land up working on their idea in vacuum.

This approach leads to a lot of lost opportunities, such as, missing out on opportunity in getting:

• any relevant information
• useful contacts
• feedback, approval or criticism

or even a missed opportunity in creating a genuine relationship. All of the above are fairly important for an entrepreneur working on a new idea.

Here is another and better approach, which as entrepreneurs we believe in and propagate:

• Just an idea is not worth any value
• True value is derived out of the team that works on the idea, the planning, knowledge and the final execution
• As founders and the core team, the secret lies in your strategy. However, this needs validation and refinement from various kinds of people:
  • Potential investors: They can give us feedback from the investors’ point-of-view, thus helping us refine our idea or pitch. Also, since these guys, interact with a lot of young companies and entrepreneurs with ideas; they are in a position to tell us if our idea will work or if any such thing already exists.
  • Entrepreneurs: These are the guys who are brimming with ideas and who will always have a word of wisdom or two. They are well networked and update about the startup world. These guys can help in validating the idea and refine the thoughts.
  • Potential customers: Who best to learn from than the end user?
  • Other people: People in general, who do not have the domain knowledge about what you are doing. Try selling your idea’s power to them. That experience will surely teach you a thing or two.

You can always choose not to talk about some sensitive/confidential parts of your business. Other than that, the more you talk about your idea that much more refined the concept / pitch will get, as we tend to improve our pitch with each sharing. It is a natural mending method that helps crystallize our thoughts. So, all you entrepreneurs with idea; share them!

Also would love to build the discussion, so go on comment on either of the blogs..

Couple of good posts about why “VCs don’t sign NDAs”, before entrepreneurs share the ideas:

• http://www.feld.com/blog/archives/2006/02/why_most_vcs_do.html
• http://www.sethlevine.com/blog/archives/2008/01/why-i-dont-sign.php

YC’s Paul graham has published Why to Start a Startup in Bad Economy

Here is what MVP partners and founders of MVP companies think:

It’s an absolute opportunity for startups and situations like this always separate ‘the wheat from the chaff’. There will be a set of “Not so good” startups that may panic and succumb to an early death. At the same time the good startups with good teams will figure ways to stick it out; last thru’ the current market scenario and come out STRONGER on the other side.

We don’t think startups will stop happening. India has been seeing a good momentum of quality and quantity of startups. Though the quantity may drop somewhat, we expect the same quality to continue.  This is one of the best times to work with early stage startups as the valuations are favorable and the weaker startups are automatically disappearing, leaving behind quality startups.

The VCs are saying they intend to continue doing deals but they will look harder and deeper and hence spend more time on each deal.  The startups today need to make more progress than before in order to secure funding, will need to make the same money last longer, reach cash flow positive and figure out ways to do stuff without spending money.

Below are some of the measures startups should implement:

• Closely re-examine all costs and eliminate costs which are not needed or which are optional. Also squeeze costs in necessary areas as well

• Think harder before making any significant cash investment/commitment

• Increase priority of revenue generation activities and initiatives

• Get to positive cash flow scenario asap

• Come up with a product / service which can allow the startup to take advantage of the current market conditions. A good product which can allow people to save money, which is what most customers/enterprises will look to do, will have an good potential to succeed

In a nutshell, nothing really changes, there still remain a lot of problems to be solved and as long as that is the case entreprenuers and startups will continue to happen and succeed.

Every startup has a core team, consisting of the founders (or just the founder) plus other key early employees. The core team members are those who have displayed the intelligence, high learning ability, passion and appropriate skill-set required for a startup assignment. They are people with a successful track record, relevant experience and good educational background.

But, the very same successful track-record, many times comes in the way of “unlearning and re-learning” that is essential in a startup environment. And that happens when some team members play majority of their new roles with old rules.

The following rules apply to you if you are building the core team or are part of a core team, because in a new startup, different laws apply.

New rules (GO WIN THE GAME)

• Be open to learning and influences. Build fresh perspectives.
• Go on a journey to build things from scratch, build them block by block.
• Think fresh and think fundamental; understand a problem in ways which was never done before and then create a novel solution.
• You surely have a rich set of experience, knowledge, contacts and education. You must use it as source of reference to help you do a fantastic job. But its very important that you:
  • Adapt the past learning to the current context before applying it.
  • Don’t skip any steps while analyzing problems or building solutions, thinking that you have done similar stuff and don’t need to repeat.
  • Continue to take a fresh look at things with the new context in mind and not let the past cloud your vision.

Old rules (OFTEN LEAD TO FAILURES – DON’T PLAY BY THEM)

• The methods which brought me success in past will continue to apply without any change or adapting.
• I have enough knowledge, no more learning required for me. I will apply my existing knowledge and make the venture a success.
• During my days as part of the middle/junior layer, I have been part of teams who have executed many challenging assignments and built things bottom up. Now that I am part of the top management and I will build things “Top down” and the junior and middle layers will worry about the middle and bottom part.

Assuming that the team and the idea both have the potential to be successful, the single most important factor that determines the success or failure of a start-up venture is “Performance in the race against time”. A well funded start-up has high expectations (and pressure) from the Investors to move fast and meet the planned targets quarter after quarter. Where as, in case of a start-up looking for funds, a lot has to be accomplished in a short time to make the venture fundable in the first place.

Decisions are the “basic units”of functioning for every organization that is working to accomplish a set of goals.

- Step 1: Make decision
- Step 2: Act on the decision

The organization’s speed of moving is directly proportional to the time that is taken to complete the above two steps for every work unit (small or big, top level or bottom level). Start-ups which lack “Fearless decision making” tend to do of the following:

- Take a lot of time in “making critical decisions” even on critical business items
- Make a lot of weak decisions – a decision is made but the next step “Acting on the decision” is really slow

This type of “Fearful decision making” culture slowly but surely paralyzes the start-up, drains the resources and de-motivates employees who are keen to increase the pace, overcome the challenges and get things done. No start-up has the time to indulge in this type of behavior.

A fearless decision is not a decision taken in hurry or just a brave decision. A fearless decision is a business decision with the right intention, a bold decision, which may make some people unhappy in the short-term but eventually will turn out to be good for the business.

The culture of “Fearless decision making” goes a long way towards helping a start-up achieve its goal of changing the world. Every start-up tries to conquer the market with a new product, a new service or a new process. Which means a start-up should always be ready to work with a lot on unknowns and make decisions in that light. The key is to embrace “fearless decision making”, with the right amount of risk proofing and planning. This allows the start-up to continue to convert unknowns into known at the required swift pace.

• Make a decision with a well defined hypothesis
• Finalize a execution plan which will also test the hypothesis and define some of unknown variables
• Execute.
• Measure the results and analyze them
• There is a good chance you can convert a set of unknowns to known, which signal significant progress for a startup

As a part of the start-up ecosystem, there are many occasions when I (and many other folks) hear about a start-up from its founder(s), which is followed by a Q&A to better understand the venture. The expected next step for me is to share feedback on the start-up, based on my limited exposure to the venture as well as limited knowledge of that space.

I think its critical for the feedback to be absolutely honest and candid and not be edited / sugar coated. The feedback should be BLUNT but not RUDE.

At MVP we select and mentor start-ups and as of now we have 11 companies and 30+ founders who work directly with us and many more companies / founders whom we interact with regularly. I have experienced that, one of the things founders value the most is ‘brutally honest feedback’. In their view Entrepreneurship is not for the weak-hearted , one needs to be able to take every feedback/suggestion opinion coming in and use it to improve further.

While talking about your startup, in a way you are on a test bed, the feedback will tell you what real customers and real investors may tell you. Infact It’s true that BLUNT feedback does hit the entrepreneurs as their venture is very close to their heart, but good guys embrace the feedback and come out STRONGER on the other side.