Incubator or B-School?

Came across this piece of news recently about JGI Ventures floating a Rs 500 Cr startup fund. JGI Ventures is a part of the Bangalore based education group Jain Group of Institutions. The 'eye catching' part of the news - however - is not that. It is what appears in the second paragraph -

Budding entrepreneurs would be able to undertake a 30-month postgraduate course for a fee of Rs.30 lakh under JGI iDEA, or Incubating and Developing Entrepreneurial Ability.

This made me curious and I went through the programme brochure. They have chalked out a comprehensive 30 month course which covers subjects across domains (Finance, Marketing, IT etc) - and also includes some 'International Exposure' to make your business plan 'global'.

Now, at first sight, it sounds more like a B School programme (and a damn expensive B School programme at that!). Only difference is that a B-School programme typically ends with Campus Placements. This won't.

And if it sounds like a typical incubator, then the fact that there is a fees of Rs. 30 lakhs makes it 'different'. Moreover, one need not even have a business idea in the head to be a part of the programme. As the brochure reads -

Having a pre-conceived business idea will be a part of this process but will not be a mandatory criteria for selection. While aptitude is important, the primary focus of the selection process is to assess your attitude and passion to become an entrepreneur

In fact, this is in stark contrast to PayPal Co-Founder and Facebook early investor Peter Thiel's 20 Under 20 programme where he wants to "invest upto $100,000" in 20 Under 20 kids and "teach them about entrepreneurship".

Is this just an attempt at a new B-School trying to position itself differently (with a sweetener of a Rs 500 Cr startup fund at the end of the course replacing the traditional campus placements). And if one thinks of it as an incubator, then doesn't the huge fees upfront remove the incentives for the 'mentor' to really mentor like an investor?

Moreover, the well chalked out structure of the program - while it looks impressive on a brochure - might not be what is required. For example, not everyone would really require a visit to seven different countries to crystallize a business plan. So at least there could have been an option to pick and chose parts of the course (and thus also cut down on the course expenses).

Certainly there are lots of aspects that pique curiosity. But still, 30 lakhs?

The 'Stop Loss' Trigger

Comparing starting your own venture with an investment in the stock market is not fair at all. But, there is one concept in the stock market jargon that I feel has some significance for an entrepreneur. A ‘stop loss’ – in simple terms – is a valuable tool (trader’s can’t do without it – but novice investors unfortunately do not use it that often) which helps you keep a cap on the losses. So in case you buy a stock for Rs 100 with the (obvious) expectation that the stock price will rise after you buy it, and unfortunately some event occurs which your diligent analysis could obviously not predict (disturbance in Libya / 2G scam / your investee company’s CEO quits), a stop loss at say Rs 90 would have helped you to keep the possible losses in check.

Coming back to our analogy, a stop loss is essentially an acceptance that as an investor, I could be wrong – and in case I am wrong, rather than throwing good money after bad (‘averaging down’ as is the tendency with many investors) – I might be better off cutting my losses. Thus, for an entrepreneur, a stop loss (and here the loss is not just a ‘capital loss’, but also a lot of ‘time’ and ‘emotional’ loss – which is far more heartbreaking) would be deciding at what time to stop pursuing the idea in case things are not shaping up as expected. In the startup where I worked before, we kept hopping from developing one product to another as we realized why our products may not work. I wonder if it was insufficient analysis of the market or a ‘conformation bias’ that stopped us from quitting early (or not getting into it at all). Similar is the case with one of my close friends who started with something which did not work out and then did something totally different and now he is into something entirely different as compared to the earlier two ventures.

A sense (and the guts) to accept you are wrong is important. Though it might sound like ‘quitting’ (which is generally not taken in a positive sense), you at least live to fight another day!

Cross posted on IdeaBing

Stay humble, (and) stay bullish!

Have written this as a guest post for Stratessence

Last year while I was doing my MBA I got an opportunity to work with a for-profit online social venture. This startup was founded two years back, and the co founders had their own jobs – so basically this was a side-project which they wished to carry on (since they had started it, but now were a tad busy with their jobs).They chose a handful of us B School students to work with them. Needless to say, we were quite kicked about working on this. However, it did not quite work out as expected. From this experience in particular and a few other related experiences in general, here are a few tripping points that I believe entrepreneurs should watch out for!

· Don’t let early success get into your head! During the first couple of months of launch you are bound to see very promising looking registrations/usage numbers. But understand that a big part of this is purely due to the affection of your family and friends, as well as the novelty factor attached to any new ‘cool’ looking business plan! It is very easy to get carried away by all the sweet talk about your product, but again take all those ‘sweets’ with a pinch of ‘salt’ ;) . A positive start is by no means a validation of your business plan!

· Launch only when ready, even if it takes time! Making your product public when you yourself are aware of major issues is like putting up an ‘in a relationship with’ status update on Facebook just because you have a crush on that person – bound to be disastrous unless the ‘crush’ (or in our case the user) is totally sold out on you (an assumption fraught with peril)

· Make sure at least one person is working full time with the startup – else, IMHO, the momentum just gets lost somewhere. The side-project would eventually (and sadly) get pushed off the sidelines!

· And finally, be a bit shameless in asking for feedback, be humble enough to take the criticism, and be flexible enough to incorporate changes which you might not have thought of in your plan A!

It is the period after the first launch that I believe is the acid test for any Entrepreneur. The joy and pride should take a backseat while receptiveness and humility should do the driving!