Today morning Ashish Gupta from Helion Ventures talked about the Golden Thumb rules of building a company. If you do not know about him, then please note that this is the founder of Junglee.com and Tavant Technologies. This was perhaps the best talk I have heard at HeadStart 2009. Here are bits of what he said (in Ashish’s quotes):

Ideas are easy and execution is hard. People are too obsessed with IP and their core idea. They all forget that the real game is the convert that into a company. The real protection of an idea actually comes from executing the idea well than just filing a patent around it.

There are four aspects of this talk:
– Listening to the customer
– Organization structures are very important for technology organization
– Metrics driven stuff. Computer science is the only science where there is no need to report for margin of error.
– Horizons is a conceptual framework of building a small organization.

Listening to the customer is the best thing you can do
The number of sales people who promise larger numbers is high. Most of us think of what will someone not buy, as opposed to what people would buy. They are not coming to terms with what are the true customer needs. Often it happens that entrepreneurs are busy trying to convince everyone about their vision. We are so caught up in the beauty of our products as opposed to the ugliness of customer needs. The truth is that the money is only in that ugliness.

Another problem that most startups face is that the founders typically want to work on only the juicy part of development. Let me warn you that 70-80% of the problem solution is routine stuff. Only about 20-30% or stuff is the most interesting one.

It baffles me when the startups show astronomical projections. They say they will have TCS as a strategic partner and HCL as a channel partner. The point is to show the partners money. Try to simplify your life. If you life is based on complex partnership, then get out of it as soon as possible. Truth is that when you take the simple stuff out, no one can comprehend what the product is all about. For example, simple advice like listen to the customer and figure out what her true needs are.

Company die more of bas sales and marketing than bad implementation. Bring them in as customer advisors or as alpha test users. At least one person in the organization should be focussed outwards on a full-time basis. Another truth about marketing is that it is not all about advertising. Marketing is much much more than that. Think of marketing as a discipline how you should build a product in first place. And then figure out what kind of advertising you need. There is something that most engineers are averse to – business. As a matter of fact the best marketing guys in technology companies are experienced engineers because they are able to convert product into a sellable idea because of their deep understanding of technology.

Organizational Excellence needs clarity on roles
The roles need to be clearly defined so that responsibility has been set on the person. The clarity in roles also clears the confusion that a person has over what is more important to him. Only when you have some clarity on organizational roles can you enforce a metric. If you feel some structure is not working, be open to change. But make sure you have great understanding and clarity on what roles each person is taking up.

Metrics
Measure. The most common argument is the we do not have anything to measure. Overtime people shall figure out what they should measure. But they should always be measuring something. This is the only was to make forward progress. This is the first step of saying that startups too need some process. Everyone always has some process – say getting up and getting ready in the morning. The question may be how much process? Because it is with a process that the company survives.

Horizons
Awareness horizon is two times the planning horizon and planning horizon is 2 times the execution horizon. Why does the person become an architect? Because the person has gone down the road and avoided several potholes that he can avoid and so his awareness and planning horizons becoems superior than a developer working under him. An example of horizons could be this: awareness horizon would mean that the company would be up and running for next million users. The planning horizon says that we will get a backup software in 6 months. The execution horizon is “screw backup because we don’t have customers”

The goldern rule of growth is to start investing in awareness horizon if you want to move up the organization. This is normally a two way process. The best CEOs would be able to relate to the awareness horizons as well as the execution horizon. But a vast majority of them are just too happy being the 10000 ft level guys.

It is very important to have a metric for all jobs. If you can’t measure, you can’t plan. And there CEOs are very few who can deliver as well as be aware of everything around them. Metrics is the the only model that I know of in the sense of moving up and monitor them in what they are doing. This is the only way I can take my boss’ job.

For bringing everyone in the company on a single footing, the focus should be on just top 3 metrics that everyone in the company is aware of.

While answering questions, he said:
– It is good to invite outside advisors to measure a small team’s performance as he believes discipline and process is a worth enough discussions to have. I did not appreciate this when I was doing my startups.
– Why VCs don’t address a Y-combinator model, because they have large funds and they cannot work with so many companies.
– Be very circumspect if you want to work with advisors. There are so many of them who would want to take half a percent of your equity and never show up again.
– Incubators are not successful model in India because there are very few people are there who can add the kind of value that a startup truly needs. Often if happens that there are a number of small boats tied to each other but not to the shore and when the low tide comes they are all run dry.