[Guest article by Vishal Gondal, founder of Indiagames]
Having started my business career at the age of 16, I had a great handicap, the handicap of not knowing many of the basic fundamentals of business and finance. What I was doing during my early days could not really be classified as business. I would call it a way I had adapted, to keep paying for my pocket money, a source of income I had created to fund my hobbies and have fun with my friends.
In 1999, I was approached by a company which I thought was into plumbing and water supply. They gave me a proposition which according to them was irresistible. The company was Price Waterhouse Coopers and their plan was to help me raise venture capital for my big ideas. Having not knowing what venture capital was, I rejected their proposal to get me ‘a loan’. I only accepted to work with them when they told me venture capital was like a loan I never had to return. And they would help me make a business plan. Basically a spreadsheet which would help investors see why my business is a great place to invest in and get amazing returns.
After spending some time with the investment bankers they were able to create probably the most complicated excel sheet I ever saw. It had over 10 sheets all interlinked with each other, all the numbers would change by changing just a few numbers on the master sheet. It had graphs and columns which were in 2 currencies and was spread out to cover 5 years of my grand vision. I was told to quickly mug-up some numbers for the meetings and nod my head at certain points of the presentation. And since I was really great at Q & A and BS, voila my first business plan was ready at the age of 22.
I was amazed to see how all the major VCs who saw my plans were getting super excited on the business plan. Some even took copies of the excel sheet and added their own columns and connected sheets to it. Soon I was looking at term sheets from multiple investors with many complex formulas and terms which I had not heard from Adams.
That was the time I had to hire a lawyer.. I quickly found one in the bowling alley- a senior in college, Somashekhar (Soma) Sundereshan who had just completed his law studies and was a qualified lawyer, just the trusted friend I needed. Having no understanding of what valuations, cap table, liquidation preference and just a basic concept in mind that I am going to get all the money in the world to fulfill my dreams. It was a easy negotiation.
I agreed to all the terms after Soma explained me one concept – the investors won’t screw me till I do my job well! Ever since my first business plan I had made many such business plans and even without fully understanding the plan have not only achieved them but in certain cases exceed them.. Now you will ask me how?
A. Compass and not a navigational map
For me the business plan was always more of a compass which guided me towards the general direction I should take in case I got lost, ask strangers and make the journey to turn the business plan a great adventure. It was not perfect but I got there. Most people in my opinion take the business plan to be some kind of a Google map which would take them to their destination forgetting that
business is an uncertain terrain which not even Google has mapped!
B. People and not numbers
Happy and motivated employees and satisfied customers is what it takes to make a great business. Companies which are run by accountants and managers who measure everything on numbers IMHO are average not best. People are not robots, they respond more to emotion and not process. Excessive processes can KILL your people and make them just head counts.
C. GUT not the BRAIN
Gut is my primary brain and has the power to override the confusions and uncertainty which complex plans bring to the table looking at large historic data. In fact it’s the GUT which gives an entrepreneur his vision and the ability to see into the future. Unfortunately in our current business environment gut calls are a taboo and business plans are credible if presented with past research and predictions by some stupid research agency. Businesses have only been able to be successful by GUT calls….
D. Trust v/s qualifications
Many a times you have to make choices in business based on advice from people who are extremely qualified in their jobs and people who may not be as qualified but are people you trust. While it may sound counter intuitive but business is about balancing both and it’s important to have both sets of people around you and let your gut take the final call. However on pure personal preference I tend to always go by people whom I trust.
E. Journey not the destination
Running a business is a journey. Every time even before a goal is reached another impossible goal is set this is what keeps people excited and going forward. For people whom business is all about making money, they surely get successful in the short run but are really never able to go beyond the initial success. A business which claims it has met all its goals has failed!
F. Story not a Formula
A successful company is always a story. A story of ups and downs, a story of fights and friendships, a story of how you did the impossible, a story of patience and passion. No two stories are alike.
There are many authors and management consultants who try and make successful businesses into formulas and many young entrepreneurs make the mistake of applying such formulas to their businesses with disastrous results. If there was any truth in these formulas by now we would have had numerous Googles, GEs, Apples and Bhartis. Therefore think of your business like a never ending story and not a finite formula.
G. Relationships and not Deals
The biggest currency a business and an entrepreneur has is relationship. Business is not all about deals, it’s not about winning or loosing. Sometimes you have to lose to win and sometimes you have to win to lose. A lot of companies and their managers get so arrogant with their success that for them every partner and customer they are dealing with has to work on their most unreasonable terms.
Even though most of the people for no other choice start working with these companies, the bottom-line is they will be the first to desert these companies the minute they get a glimpse of an alternate choice. Companies are doing only one sided deals without giving a win-win situation to the person on the other side thus failing to build a relationship. In your toughest and best times, it’s these relationships
that count.
When I started, I was naive and probably that is what got me here. If I too was a MBA or Accountant I would have been still digging my heals on some spreadsheet creating crappy businesses.
