Is your startup = you? Time to separate!

by Chandoo on February 16, 2012 · 5 comments

in Hiring, How to Start, My Story

One of the turning points in my startup life is the time I spent in Sweden / Denmark. I was employed with TCS (TATA Consultancy Services) in 2009, when they sent me Sweden (and eventually to Denmark) to help a large insurance company in their IT program.

While I was in the beautiful town of Malmo, I met my mentor,Mr. S. He ran a couple of companies for 2 decades and has a wealth of experience, practical wisdom when it came to running a company in India. Naturally, I discussed my plans for starting a company with him at length, often on our train rides from Copenhagen to Malmo. I still remember clearly what he said on a bright evening when we were taking a bus from Malmo Syd station to his home.

Chandoo, Do not make your company depend on you for everything!

Malmo Town (you can see the opera center)

[Image from La Citta Vitta on flickr]

Do not make your company depend on You! – but why?

In many start-ups, there is no separation between founder(s) and the company. Its like the founder = company. We have all read the stories of Bill Gates, Page & Brin, Steve Jobs, Narayana Murthy etc. They all played vital role in shaping their companies.

But wait!?!

Microsoft, Google, Apple, Infosys  became such world class companies because their founders let the company grow, by accepting that company is not them.

But wait?!?

Many of us are not here to run next Microsoft or Infosys. We just want to run a small, successful enterprise and live happily.

Even, in that case, distancing yourself from your company is a great idea. And today, I want to tell you how I followed Mr. S’ advice and did that.

5 Reasons why you need to make your company not dependent on you

You may be wondering why the heck take the trouble of making my company not depend on me.

Well, here are 5 reasons.

  1. You can enjoy life: Remember, for many of us the reason we start is simple. We want to get away from the hectic 60 hour workweeks and do things that we love & enjoy (like playing with your kids, taking walks with your spouse, watching a movie, reading a book, learning a new sport …) If your company is a big part of your life, you cannot do this.
  2. Your company can grow: Your company is just like plant. When it is small, it needs your support – regular watering, top soil, prevention from pests etc. But once your company is of a good size, the support you give should be different. You need to let it grow.
  3. You work on what you love, not what you have to: No matter how exciting the area of work is, every company has things that you dont want to do. In my case, I do not want to do work related to accounting, taxes, administering my web-server, designing websites, organize my email or do followups. What I really like to do is learn new things, share my ideas, create new products, polish existing ones, connect with customers and help them. By letting the company not depend on me for everything, I can choose to work on what I love and find others to work on the remaining areas.
  4. Your company makes fewer mistakes: A direct consequence of playing a large role in your company is that you are part of every decision. While this gives you some sense of control, it comes with a huge price. You are going to make mistakes. Why? Because, you are not an expert in everything.
  5. Makes selling or closing your business easy: Not that I have any immediate plans for either. But every startup owner thinks about the question, What is going to happen to my company in long-term? While not everyone can get a $100 Bn IPO like Facebook, we all want to prepare for the eventuality – merger, acquisition, IPO or closure of your company. In any case, a company that is independent makes this whole process smoother and gets you better valuation. Imagine how much Facebook would sell for, had Zuckerberg been their only coder.

Making your Company Not Depend on you – The process

For me, the process of making my company independent has 2 steps

  1. Preparation
  2. Execution

In the preparation stage, I have identified all the areas of work that involve my presence and figured out ways to reduce, automate or outsource them.

In the execution stage, I just packed my bags, left with my family to Bangkok for 8 weeks. Even though I am available on phone & email to address the work needs, I tried to minimize the time spent on running business myself.

Step 1 – Preparing to make your company independant

This is the difficult part. In my case Preparation began around Jan 2010. And it took one whole year.

Hire your first employee:

As my business grew, there were areas of work which I could not give as much time as they need. So I hired someone to help me with that. I was worried if the person can do as good a job as I did. But my worries vanished in first week itself. Come to think of it. We are not doing cutting edge research in Physics or Biology. There are 100s (if not thousands) of people who can replace us.

Note of caution – Dont hire too many people before you are making profit

Often, I see startup founders trying to hire a few employees using the seed money (or investor money). While this may work in some cases, it is going to backfire in many. Especially, if you have not become profitable. Your first (and most important goal) should always be to make your company survive on its own. And becoming profitable is a the proven way for it. (You can also constantly borrow money with the promise of gold pot at then end, but you would not find many takers)

Make Revenues (and profits) not depend on your time

In service business (ex: saloon, IT consultancy, clinics, coaching etc.), your revenue is proportional to the time you spend providing the service. If the consultant is on holiday in Hawaii, you can be sure that he is not making any money.

One reason why starting a consulting or service intensive business is a bad idea.

On the other hand, in product business (ex: iPad cases, software, websites etc.), your revenue is proportional to your marketing & your customer reach. So if you are on holiday in Hawaii, still customers are purchasing what you made.

While many startups begin with a service orientation, at sometime, you want to switch to product side.

From beginning I have product orientation in my mind, thanks to Mr. S’ advice. But there are still some areas where my time determines our revenue potential.

Here are a few things I did to minimize that.

  • Emails: Replying to customer emails and connecting with them is an important part of my business. I did not want to let go of this. But then, I tested my beliefs by giving my assistant access to my email account for a month. And I was proved wrong. He did just as good a job as I do. Plus, he highlighted important emails that need my attention. Customers are happy, I have more time on my hands. Problem solved.
  • Consulting: As I mentioned earlier, consulting is a good way to boost your revenues & get valuable real-world knowledge. But over time, I realized that I am not able to fulfill all consulting requests that came our way. So I did 2 things.
    1. Partner with another company: so that they can take up any large consulting requests that came my way (and pay me some commission)
    2. Hire someone to help me in consulting: so that they can do the consulting work.
    Note: In both cases, it is important to make sure they can delivery high quality of work, otherwise, your company will get bad name.
  • Product Creation: Even though majority of our revenues depend on product sales, still I created these products. So I experimented by hiring someone to create the product (based on the vision I had). The end result – others can do just as good a job as I did. Customers are able to get what they want, We made more money – problem solved.
  • Writing Content: Our website content serves 3 purposes (1) It makes people awesome in Excel, which is our goal (2) It helps us in promoting our products (3) It generates some revenue thru advertisements. While I continue to enjoy writing for the site (and here on Startup Desi), it is unreasonable to expect that I can write every week for next few years. What if something were to happen to me (touch wood) or what if I had to be away for a few weeks. So I have asked some of our regular member to become guest authors. I am so glad they choose to join us. Now we have diverse content, perspectives. Also, I realized that a major part of making people awesome in Excel relies on our past content. So, even if we do not write something new for a week or two, no harm done. 🙂 The same applies for advertising revenues too. A good portion of the ad revenues come from past articles.

That said, not everything is separated. There are still a few things that require my time. But these are the things I love to do and want to do. As my company grows, I may decide to delegate a few of them as well.

Set up processes

In large corporations, processes and guidelines often slow things down and stifle any creative work. So many startup founders tend to hate it. But even to keep things simple, you must follow some rules. This is what I did. I defined a set of guidelines, values so that we (my colleagues and I) can make best decisions at any time.

Examples:

  • Help customers at the earliest and easiest way possible.
  • Issue refunds with out questions.
  • When having to choose an option between awesome and something else, go with awesome, always.

Test your Beliefs

Many times we continue to do something because we believe in it. As a startup owner, a big part of my work involves doing new things. So I applied the same to my beliefs and tested my beliefs. For example,

I believed that I must update my site 3 or more times a week to keep my customers happy: Once I tested this by not updating the site, I realized I was wrong. Also, I found that I need not update the site. Other experts can update it too.

Step 2 – Making your company independent

or in other words, cutting the umbilical cord!

Well, provided you have done all the preparation, the next is simple. Just do it. I did this by making a family trip to Bangkok. As you are reading this post, I am in Bangkok enjoying food, sights & foreign experience. We came here on Jan 18th (almost a month ago). I did not have internet access for first 3 days, then my laptop crashed. After 2 weeks, I got a notice from my web hosting company saying my site should be moved to a new server. And guess what? My business is still running and thriving.

Even though I am out of picture from many activities, everything is running as smoothly as it could. To give you a sample, while I am in Bangkok,

  • A new employee joined us in India.
  • Some one optimized our site, improved the security and setup mirror site etc.
  • We had more than 200 customers
  • We paid advanced taxes and payroll taxes
  • We had 14 new articles on the site, 9 of which are not written by me.

Are you making your startup independent ?

How are you running your business? Does it still depend on you for everything or have you made it a separate functioning entity? what are your thoughts in this? Please share using comments.

Related Reading:

If you want to learn more from my experience, read the following too.

{ 5 comments… read them below or add one }

Nupur Gupta February 29, 2012 at 7:00 pm

Another extremely valuable post Chandoo. I have learnt a lot from following your excel blog for over 2 years and now from looking at StartupDesi. You have some really enlightening and actionable posts for startups. In fact, it is people such as yourself who have inspired me to take the leap from my day job into what I have been thinking about for sometime. Ideally, I would have liked to do it in a similar fashion to yourself i.e. be blogging for a few years before taking the plunge full-time into my business. That being said, the thought of a startup is so much more exciting to me, that it's hard to put off an idea whose time has come. Many kudos for you for making a real difference in this world, being so transparent and for wanting to spread your knowledge to others. It's a rare quality and something that really sets you apart and makes people such as me want to follow you. Enjoy Bangkok 🙂

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Madhu Nair March 8, 2012 at 1:50 am

Hi … Came across your excel website while google for some dashboard info and came over here from there.

Interesting stuff here … I am currently managing a startup company in its very early stage and can relate to most of the stuff you are talking about. Anyways … the other thing is that that the social share bar comes in the way when you are using a RSS Reader. You might be losing a lot of readers because of this.
Cheers,
Madhu

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mittal April 18, 2013 at 11:16 am

I think the most important part of being an entrepreneur is the passion , and its very important to spend your time in what you love to do and hire people who can do work which is not as important as yours

Great article kudos !!

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Siddharth May 27, 2013 at 11:03 am

Hi Chandoo, I bumped into your website and I learnt a lot from the experiences you shared. I am surprised why theres no news of your venture. You should surely be on "chai with laxmi" http://chaiwithlakshmi.in/
You surely made difference in lives of so many. Goodluck with what all you do in future.

Siddharth

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Deepak Dave July 27, 2013 at 6:05 pm

Hi Chandoo,

I think you are an excellent professional and very talented. I thank you for sharing your vast knowledge and experience. You have a perfect attitude to be a very successful entrepreneur and I for one lend my support to you. We need more people like you in this world !

Best Wishes,

Deepak

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