Thursday, February 18, 2010

Building a Company

Continuing from The spark that started a company:

The five partners in the company had a vision - to build an excellent ecommerce platform. It was a huge vision for online retailing in India. It included both building world-class ecommerce software as well as building a vast catalog of products and services that can be sourced and fulfilled for retailers in India.

So what were the main hurdles in achieving this vision? Vishal says "There were three main business problems to solve. First, we did not have the technology infrastructure ready to show to retailers and brands; Second, we did not know much about retailing products in India and there was no digital catalog readily available. Lastly, we needed to fund our growth, and hence time to launch and making some income was important. We decided to build our own online retail presence for the consuming India after which, we can offer software as a service to retailers and brands."

Those sound like huge things to accomplish. How did you guys start? "Well, the first thing you do if you want to start a company is you write a business plan, and so, I did that. I wrote an 18-page business plan."

But... many startup people today say that writing B-plans are for wimps and it hardly survives reality? Vishal adds "Writing a B-plan was super helpful. You know that the business plan won't survive its encounters with reality. The reality will never be the plan but the discipline of writing the plan forces you to think through some of the issues and to get mentally comfortable in the space. Then you start to understand that if you tweak this knob, this will move over here, and so on. So, that was the first step."

But... where did you get the money? "The initial startup capital for came primarily from all my personal savings and from my family. This is one of the biggest strengths for an Indian - the support of family. My parents invested their savings in what is now That was very bold and trusting of them, but made me anxious about making good on their investment! But you have to take risks when you want to chase your dreams, and we got started. We decided to start in Ahmedabad because I was familiar with the city living from my early days and the cost of living is reasonable. We also had some office infrastructure available at very attractive rental and moving to a city where there are some fine institutes like IIM, IIT and many other local engineering colleges proved to be a great decision."

Okay, now that you had some initial idea of the business, how did you tackle the required technical infrastructure? "We went to Bangalore which, in my mind, qualifies as one of the world's capitals for great technical talent. We interviewed many engineers and spent a lot of time on that because that was going to be an important investment - we needed to build the technology that would run the store. Over several trips, we found the best people, who turned out to be the most important colleagues and partners in our history of building Infibeam. I consider ourselves lucky in attracting the best talent at such early stage of the company. From day one, we wanted to build a business and not just earn a living. It's like this: If you get people who are focused only on earning a living, they will pull every bit of money they can out of the company. For me, it is about making something of value. If you want to build a business, take as little out of the company as you can to live on, and plough it back into the business. When the year end comes, if you’ve done well, then you get dividends. We were lucky to find people who understood this."

So what was the initial phase of the company like? "The early blank sheet stage is one of the hardest stages when there is no one in the office but yourself. A lot of work has to be done, just like building a new home -  finding affordable office furniture, initial hiring, getting the company incorporated, and all such simple but several pedestrian tasks. That's how we started - one step at a time. Everyone wants their house to have a good foundation, right plumbing, working lights, etc. right? In this stage of the company, you have to be willing to work hard, and you have to be willing to do a lot of the work yourself, even when you don't know exactly what to do. You need to have enough experience to draw on, especially related to how to build a successful product, how to organize a budget, and how to do those fundamental aspects of running a business."

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