Starting, growing and managing a starup

Panel: Starting, Growing, & Managing A Business: Opportunity & Pitfalls

Sumita Batra, CEO of Ziba Beauty, and author
Himanshu Bhatia, CEO of Rose International, a IT services company
Jody Dunitz, member of Tech Coast Angels
Sharon Stevenson, partner at Okapi Ventures
Moderated by Toni DasGupta, 4D Convergence

TiE logoOn February 21st, 2007, the TiE Southern California chapter showcased an all women’s panel, which discussed the challenges and joys of starting and growing a business. The discussion was aimed at being a practical, how to, down in the trenches perspective from two entrepreneurs who have been there and done that, and two investors who have helped entrepreneurs get where they are going.

1. Starting/ Growing your business: Often, one hears of people starting companies, effortlessly raising funds, growing the company spectacularly for a few years, and then taking the company public. Reality seldom seems to mimic such perfection.
What prompted you to start your first (or present) company?
What did you need to do to get your company off the ground, and to grow it?

What is the biggest challenge you can remember facing in the early days?

Sumita spoke of taking on the responsibility of running the company (Ziba) that was started by her mother. Although the business was in existence, she spent several years growing the franchise, and very importantly, giving the brand a lot of cache (she and Ziba have been associated with many of the beautiful people - Madonna, Naomi Campbell and a host of other Hollywood regulars).

Himansu spoke of starting her IT services company Rose International, initially, as a lifestyle choice, over working at a corporate job. Over the years Rose has grown to 1000 employees, and is a long way away from a “lifestyle” type of business.

Sharon credited her entre into the VC business to a case of good timing. She came into Okapi ventures at an opportune time, when she was able to apply her extensive training in the bio-med field into directing Okapi’s life sciences investments.

2. Self fund or venture fund: Did you choose to boot strap/ self fund your start-up or did you decide to look for outside investors? Are there advantages to getting outside investment vis-à-vis funding your own venture?

Rose International was bootstrapped from the beginning and had never pursued venture funding. Ziba has had a line of credit with the bank for use in financing its expansion. Jody spoke about start-ups, particularly technology companies, needing large amounts of capital, initially, and that although some companies might do well without any outside infusion of cash, for many, being well funded at the start is not only necessary, but is a critical determinant in its future success. Both investors also mentioned that the value is not just in the cash, but in the know-how and expertise that the angel or venture investor brings to the table. In other words, smart money is good money.

3. Women in business: Today about 50% of all businesses are started by women, yet there are very few women heading up large companies. Only 4% or all women led companies make it past the 1M in revenue mark. Why don’t we see more women leading companies (both entrepreneurs and in corporations)? Is it a choice or from lack of opportunity?

Neither entrepreneur felt that there was a lack of opportunity for women. It was also clear that the women on the panel were all self starters and that gender would not be factor for them. They all acknowledged, however, that they had always been in professions where they were seriously outnumbered by men. Having the strong support of their families was cited as one of the reasons why these women felt they succeeded through many hard times.

4. Mentorship: How important is it to find a mentor. Did you find a mentor over your business career?

While having a mentor was considered to be very important, it is clear that it is not very easy to find a good mentor, who has no other agenda than helping their mentee succeed. A key factor in finding the right people to help and support you seems the be the willingness on the part of the entrepreneur to get out there and talk to people about the business, and about any issues they might be facing.

There was some discussion about the fact that for specific problems, it might be a good idea to pay a professional (such as a consultant) for advice. Sumita talked about having a mentor who had helped her over the years by providing guidance, when she hit various business road blocks. She was able to make best use of his expertise by calling upon him when she had a specific problem, and then putting his advice into action. She found that such targeted interaction, followed up with specific action on her part to resolve the problem, helped her to use her mentor’s time most efficiently.

5. People power: We hear that investors invest in people, not ideas. How important is it to attract the best talent? How do you go about recruiting and retaining the best? How important is the management team in companies that you invest in?

All the panelists agreed that the people factor was the biggest determinant in the success of a company. It has been said that it is better to invest in an okay idea with a great team behind it, than an grand idea with mediocre management. Sharon and Jody agreed that it is the management team, ultimately, that will make or break a company. Sumita explained that Ziba maintains its edge by hiring the best, and they are able to do this by maintaining a close knit family atmosphere in the company. Himanshu spoke about that fact that when a company grows to 1000 employees, there needs to be a structure where the top management is intimately connected to the next level of executives, who are closely involved with all the employees that they are responsible for. Besides that, a generous, and well administered incentive program is a good vehicle for retaining top talent.

While there is no single formula for success, it is clear that the one common factor that successful people share is the passion that they feel for their endeavors, and the extraordinary effort that they are willing to make in order to realize their dream.

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The Art of the Fast Pitch: Your Business Plan in 1 Minute Flat!

Recently the Tech Coast Angels held their ever popular, yearly fast pitch competition at UCLA. After several rounds, 12 start-up companies were selected to make the fast pitch.

Each company was given 1 minute - exactly. In that time, they had to impress a team of 12 judges. At the end of each presentation, the judges held up placards, rather like they do at the Olympics ice skating competition, with two scores going into the mix - presentation and investability.

If you are wondering how much can one really squeeze into a minute - the answer, well, a lot. The teams did admirably presenting their business plans in 60 seconds.

Not co incidentally, teams that scored high for investment opportunity, also got top marks for presentation. It is clear that an effective pitch is key in creating a strong impression on investors.

In a 1 minute pitch, it is very important to drill down to the basics and select a few key highlights, and pare the entire pitch down to these points.

There are a few key ingredients that must go into the perfect pitch

1. The idea: If the essence of the plan can be distilled into one sentence, great. If not, explain the pain that this plan will ease. Sometimes that is easier, and quicker, to explain.

2. The people: This is crucial so don’t skip this step. You don’t need to recite titles of people or who is on your board. Just say “I am Sam and I have 10 years of expertise in …..”. Investors maintain they invest in people, not ideas.

3. The competition: While there is not enough time to trash the competition, you cannot ignore them either. One well thought out line about how you are different from the crowd, will take you a long way towards credibility.

4. The customers: If you have a real client - tout it. There is nothing like the endorsement of knowing that someone else is taking a chance on your company.

5. Intellectual property: Very often investors might like an idea, and even how the company is executing, but might be leery about investing, if they do not have an assurance that the technology is protected. So if you have a patent, let them know, and the rest will be easy sailing.

A fast pitch is not meant to get you funding. It is meant to give the investors enough of a flavor to whet their appetites, so they will want to talk to you further.

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