Doing a Startup is like doing a Ph.D.?

Quote from ThePmarca Blog Archives, Marc Andreessen:

“You will flip rapidly from a day in which you are euphorically convinced you are going to own the world, to a day in which doom seems only weeks away and you feel completely ruined, and back again. Over and over and over.”

Which Ph.D. candidate has NOT felt this way during the long 4+ year journey?! J

MarcA goes on to say, “Second, in a startup, absolutely nothing happens unless you make it happen.” In a Ph.D., nobody forces you, not your supervisor (till after 4 years!), not your friends, not anybody. You get it done yourself due to some inner drive. And the long hours and the intense, unwavering focus – the same inner drive! One difference is that your march to dissertation is not affected much by things like stock market crashes, terrorist attacks and natural disasters; on the other hand, your galloping startup can grind to a halt if any of these happen at an inopportune time.

So, what lessons are transferrable?

·       The ability to work long hours with unflinching focus – in my opinion, this is really the main thing you learn while doing a Ph.D.! Increased knowledge in your domain that you acquire/ create during your Ph.D. has a short shelf-life; till other young upstarts come and revolutionize your field.

·       Carefully crafted presentations and write-ups. All acronyms expanded on their first occurrence. All figure axes labelled. Consistency of terms and definitions throughout a presentation. And many such excellent documentation habits.

·       Persistence – it is the hand-maiden of innovation and creativity. Ph.D. journey teaches this lesson in spades. This can be a plus or a minus – startups sometimes requires sudden “pivots” to survive; persistence, unless of the enlightened variety, can be a burden then.

When you have a Ph.D., at some time or the other, you knew more about some topic than anyone else in this world! Don’t carry over this “know-it-all-ness” to a startup – it will usually create friction!

On balance, there are more positive things to transfer than negative. Mr. Ph.D. will have to engage co-founders/ co-workers with the humility born out of the realization that startup is first of all a business and that too with many facets beyond his thesis topic. Ms. Ph.D.’s focus, hard work and persistence will lead her to having strong opinions and the willingness to fight for them - this is a great positive signal to all that she is deeply involved and care deeply about the startup. If co-workers can embrace this level of engagement without questioning motives, tremendous value-add will naturally follow!

PG Madhavan, Ph.D.

CAO & Founder

Syzen Analytics, Inc.

Bellevue, WA

www.SyzenAnalytics.com

+1-425-440-1487

Startup Pains & Pleasures #4: Workplace Creativity & Fermi Problems

In my blog last week, I talked about my everyday creativity “trick” - if you cannot solve a problem, find an approximation of the problem that you can solve. If this solution is adequate, meaning it is still of business or technical value, if you can “sell” the approximate solution, do it. Then try for a closer approximation of the problem and solve it; this will be your version 2 solution!

Have you tried “creativity by approximation” yet? I will give you a very simple example from last week. My wife picked me up from the airport and during the drive back, said to me, “I meant to vacuum the whole house before you got back from Tokyo but as I was too tired, I just did the heavy-traffic areas”. I was pleased that a readymade example for my creativity “trick” had suddenly dropped in my lap. She approximated the “whole house” by “heavy-traffic” areas, solved the problem, and had energy left over to go out later that night. This is classic day-to-day creativity!

Is there is a *systematic* way to arrive at approximate solutions? There is: a favorite method of mine known as “Fermi Problems”. Author Hans Christian von Baeyer has a classic article on Fermi Problems called, “How Fermi Would Have Fixed It” (Sciences; Sep/Oct88, Vol. 28 Issue 5, pp2-4).

Let me explain the classic Fermi Problem method using an example. When I taught Probability Theory & Stochastic Process to EECS students, the first question I asked them in the very first class of the semester was the following: “How many piano tuners are there in Ann Arbor?” When the class acquired a collective glazed look in their eyes, I took them through these steps:

1. Take a guess at Ann Arbor’s population – say, 300,000 people.
2. Now, assume that an average family contains four members. The number of families in Ann Arbor must therefore be about 75,000.
3. If one in five families owns a piano, there will be 15,000 pianos in Ann Arbor.
4. The average piano tuner:
a. Can service four pianos every day of the week for five days and
b. Has two weeks of vacation during the year

- A typical tuner would service (4 pianos per day X 5 days a week X 50 weeks per year) = 1,000 pianos per year.
- So, there must be about 15 (15,000/1,000) piano tuners in Ann Arbor. Check the telephone directory Yellow Pages and see what you find . . .

The guesses in the first 4 steps are totally unrelated. In statistical terms, these random variables are independent and hence the errors in these guesses tend to “cancel out”. Approximate solutions arrived at using the Fermi Problem method are surprisingly good (within an order of magnitude of accuracy) and hence very useful for practical situations.

What this tells us is that when confronted with a problem, do not be dismayed by a lack of information; Get Creative! – (a) break the problem down into a number of sub-problems and solve the sequence or (b) solve an approximation of the problem.

In the first case, you find approximate solutions to a bunch of exact sub-problems and in the second case, you find an exact solution to an approximation of the problem. In either case, the approximate solution you reach is a creative way out – either when you are in a tough job interview (you may recall the infamous Microsoft and Google interview questions!) or when confronted with a rough practical situation.

Next blog onwards, I will leave the Start Up topic and move on to other interesting issues.

Enjoy the haiku . . . PG

“Summer evening
Hear the breeze caress the leaves
Honey BBQ flavor!”

- AM

Startup Pains & Pleasures #3 - Workplace Creativity

Before I discuss creativity in the workplace, let me dwell on some topics related to “Axiomatic” HR from last week’s blog. I encourage you to check out my readers’ comments also.

First of all, “Company Priorities” are the axioms that drive more than just HR (even though I do not use them to identify what markets to address or products to produce). Let me give you an example beyond HR. When we were deciding on how the architecture team members would exchange design information, one factor guiding the decision was the “Globally-integrated Business” priority. Even though there was no immediate need for a sophisticated solution, I decided to adopt “Webex” - a conferencing tool that allows employees dispersed worldwide to collaborate effectively at low cost. In general, what I found was that if I consistently used the axioms, making even simple day to day decisions became easier, and quite importantly, easier to explain to team members.

One of the unanticipated and rather startling insights that came about was related to “tiled teams”. Such concepts are never right or wrong, rather a question of whether it is right for a certain time or a stage of company growth. Anyone who has done a startup knows: startups go through many “near death” experiences! The reasons are many; ours were never due to product or market collapse (we had done the technology before, had the required licenses and had great ecosystem partners). Ours were due to the classic reason for startup near-deaths: dried up cash flow – especially after the October 2008 Great Recession.

There is no doubt in my mind that “tiled teams” are ideal for a going concern with sustained cash flow. In retrospect, however, it seems to me now that when going through near-death experiences, things may have been a bit easier if *everyone* pulled in the same direction (which is more likely to occur when all the team members are like-minded). A near-death experience is not the time to expend a lot of energy “herding cats”. In other words, “tiled teams” may *not* be the best for an angel-stage startup, but may be ideal for a later Series C-stage startup enterprise.

Summarizing, start as a “garage” operation, locate near the VCs, don’t enter into personal liability and keep over 50% ownership of the company to yourself. Find axioms, whatever they may be, that capture core company priorities; let them drive every internal decision possible. At an early stage, start with teams of like-minded people and as your company becomes self-sustaining, remake the teams into “tiled teams” by mixing in new hires with non-overlapping skill sets and behavioral styles.

Creativity: With respect to creativity, I hope my list of US patents and published articles lend credibility to what I have to say on the topic.

As you will note on the right-hand side of the page, I see creativity and tenacity as tightly coupled; in fact, as two sides of the same coin. If you are not tenacious, give up easily and move on quickly, you never arrive at the stage where you have to grapple with an issue long enough to bring to bear your creativity and ingenuity to solve it. Here I am talking about day-to-day creativity and not “high-level” grandiose creativity.

My “trick” is very simple: if you cannot solve a problem, find an approximation of the problem that you can solve. If this solution is adequate, meaning it is still of business or technical value, if you can “sell” the approximate solution, do it. Then try for a closer approximation of the problem and solve it; this will be your version 2 solution!

I have never met a problem - be it in business, marketing, product design, technology, signal processing, whatever – that I cannot solve in the sense of the previous paragraph. The key is “approximation”. Actually what makes this approach viable is that one can make precise statements about approximations – people well-versed in esoteric topics such as measure theory and functional analysis know this fact very well (the precise concept of “almost everywhere”, for example). In fact, such concepts lead to rapid expansion in certain areas of pure mathematics and the solution to a large class of problems; these developments have had a direct bearing on advances in the engineering fields of image and signal processing which have given us a profusion of incredible consumer electronics devices in recent decades.

If one cannot make precise statements about approximations, the solver and the solution user may both be unclear about which problem was actually solved and what the roadmap is to arrive at the full solution. Let me give you an example from engineering within a B2B business context. Typically, development starts with an RFP (request for proposals) from a buyer to a vendor with a long list of requirements. Even in a prototype-driven development model, something similar happens. The first step of the “approximation” that I talk about is this list of requirements. In all likelihood, meeting all the requirements in a first generation product will make it expensive and the early end customer will use only a subset of features!

The vendor and the buyer should negotiate to identify the first subset of requirements to meet (product version 1), then decide which requirements to meet (and when) in the next step (product version 2) and so on, to create a solution *roadmap*. This is the “precise statement about approximation” that I am talking about – nothing very esoteric as you can see; I have simply made it explicit that the product solution is not a “point” event but a “trajectory” and called it out using some new terminology.

If used consistently, this same approach also contributes to *personal creativity*! Whether you are arguing with your teenager about course of study or you are grappling with an engineering problem that was assigned to you, you can use this “creativity by approximation” method. I am sure you have experiences along this line and look forward to comments and stories that embody the sentiment: “creativity by approximation”. Give it a try in a potentially creative situation during the coming week and tell me about it . . .

Enjoy the haiku . . . PG

Let us conclude with a random haiku . . .




“Pedestrian mall
In central Ginza on Summer weekends
Street shamisen music”


- PG

Startup Pains & Pleasures #2 - Axiomatic HR

As I mentioned in my last blog (Startup Pains & Pleasures #1 – Funding), I had set out to start up a real business and not a garage operation. Therefore, I spent a considerable amount of time thinking about people issues – what kind of people do I want in my company, how do we evaluate ourselves in a transparent way, what would help all of us contribute positively and so on. This is what I came up with over one or two months . . .

I call it “axiomatic” HR (human resources). The idea is that there are a few core basic beliefs or values or axioms for the company. Answers to any questions within the company can ultimately be found if you refer back to the axiom; or in a more mathematical way, every evaluation, promotion, interaction and other procedures can be generated from the few basic axioms. I called them “Company Priorities”.

Company Priorities:
• Tiled teams
• Globally-integrated business
• First to market
Tiled Teams: Microsoft used to try to hire clones of BillG (called “hardcores”); can you imagine a 10-person team of all hardcores?! I am a strong believer in and a practitioner of teams created by “tiling” great people with minimal overlapping talents and skills (with a few hardcores here and there). Tiling helps minimize “group-think” which is the unintended effect of the natural human desire to associate with like-minded people. Leading “tiled” teams is tricky – a hardcore could try to bully the rest but the team leader has to maintain good team dynamics without stifling the hardcore. I start by requiring any team I train to read (and re-read) the STAR Engineer paper (“How to be a Star Engineer”, IEEE Spectrum, October 1999). I then take every team in the company through a training exercise I have developed. Team leader is usually kept very busy!
Globally Integrated Enterprise: Sam Palmisano of IBM wrote (Foreign Affairs, May/June 2006): “A Globally Integrated Enterprise is a company that fashions its strategy, its management, and its operations in pursuit of a new goal: the integration of production and value delivery worldwide.” I see three major benefits to the global approach: (1) lowest cost, (2) best talent wherever available and (3) “tiling” at an organizational level leading to a highly creative and dynamic enterprise.
First to Market: Being the first even with a sub-optimal (yet bullet-proof) product is a critical success factor. May be all the bells-and-whistles are not there (“sub-optimal”) to make the early release date but the features you advertise should work flawlessly (“bullet-proof”). Once you are in, you can add features in consultation with the customer.

Employee and the manager assess employee's performance purely based on its contribution to company priorities. Any employee’s work result ought to be traceable to one or more of the 3 company priorities. When in doubt, apply this test: Is my action going to move the company priorities forward? If so, do it; you don’t have to wait around to ask for permission.

Creativity in the workplace is another interesting topic - more about that next week.

Enjoy the haiku . . .

PG

Let us conclude with a random haiku . . .


“Complex problems have
Simple & easy to understand
Wrong answers”

- by VR

Startup Pains & Pleasures #1 - Funding

People often ask me, what are the three hardest things about a startup? Raising money, uncovering cash and finding funds – without a doubt, this is the single hardest issue. A variety of factors contribute to it.

1. Stage of your startup. My experience is with what is called “early-stage.”This is when a germ of an idea needs to transform into a basic business. Angels or well-wishers, and then what are called SeriesA VCs (venture capitalists), fund you till the next stage. Zaplah needed US$3 to 5 million to complete this stage. Clearly, there is maximum uncertainty at the early stage and very few startups get beyond it.

2. External events. As I was getting ready to move beyond angel stage to early-stage VC, the October 2008 global meltdown occurred (my brother uses the word “meltdown” dismissively; maybe that is because in India where he is located, growth is still 5% (positive) but in places where Zaplah was relevant such as Singapore and USA, GDP was going negative). Okay, so let us call it the Great Recession; my only advice – don’t do a startup before a Great Recession (if you can tell it is coming!).

3. My lessons. As a veteran of the industry, I wanted to start building a business – don’t do it! VCs will NOT fund such an effort; they fund clever little ideas *at this stage*. Nobody funds the building of a solid new business even by a veteran. There are a bunch of “valid” reasons for this...

• During the early stage, investors want the bets to be small due to the large risk and hence small outlay.


• VCs want the startup to be in their backyard so that they can check up on it frequently. This is the push back I got from the 30 or so VCs in Silicon Valley I talked to. Zaplah is located in Singapore.


• VCs in countries outside the US are more risk-averse than US-based VCs. Singapore VCs have an appetite for early stage funding of chunks less than $1 million. Their horizon is very immediate – for great insight into Singaporean entrepreneurism, read the memoirs of the father of Singapore, Lee Kuan Yew (From Third World to First : The Singapore Story: 1965-2000 by Lee Kuan Yew). He talks about the Hakka community from mainland China who are the majority in Singapore - they are merchants who tally their sales and profits at the end of every business day! Quick returns are expected. I am definitely a super advocate of Singapore’s future role as a beachhead for a Greater SE Asia strategy – more in a later blog.


• Talking about VCs outside USA reminds me of another story.

By the way, I will alter the names of people and identifiable details so that none of you “blofers” will sue me. [I am a “blogger”; I have not found a good term of someone like you, “blog followers” – “blofers” is what I have coined. You are super-important to me; I and other blofers want to hear your comments and ideas]

• The story goes like this… I wanted to raise $100,000. I talked to a guy in the Middle East and he asked me how much cash I had to put in? I said “zero”. He said, “I will give you $100K and I will own 100% of the company. Else, I will give you a *personal* loan for $50K (with all the personal liabilities) which you put in and I will put in the other $50K and you and I will own 50% each!” If this story does *not* strike you as bizarre, you do not know the entrepreneurial philosophy that made Silicon Valley what it is.
• Also, watch out for how much of your company VC’s want to own. As a good industrialist friend of mine reminded me, it is like the “The Old Man and the Sea” (my all-time favorite fiction book; see the right margin for my non-fiction favorite); by the time the marlin is brought ashore, the sharks (you know who they are) have eaten all the flesh and you are left with the bones!
  
  So start as a “garage” operation, locate near the VCs, don’t enter into personal liability, and keep over 50% ownership of the company to yourself.
  
  Who you have in your team and how you measure yourself are super important factors - more about that next week.
  
  Enjoy the haiku . . .
  
  PG

Blofer-sans, please post your comments and questions; I would love to hear from you.

Let us conclude with a random haiku . . .

Hanami festival in Tokyo in April/May is a time when *everyone* makes it a point to sit under a sakura tree.

"Sakura falling on office-mates
Cool evening
Warm sake"

- by PG

Startup Pains & Pleasures #0

Weekly post of PG's experiences with startup Zaplah Corp . . .
PG




Let us conclude with a random Haiku . . .
Hanami festival in Tokyo in April/May is a time when *everyone* makes it a point to sit under a sakura tree.


"Sakura falling on office-mates
Cool evening
Warm sake"