Advertisements

Category Archive : Video

How to deliver bad news to investors

Hey founders, today I’m going to address a crucial topic: When to update your investors with bad news. If you’re an entrepreneur and running a business, you will have to give bad news at some point.

There are many ways to give bad news. One of them is not to give any news at all, let everything go down, and then explain why you have only ruins and not a building on fire. This method isn’t recommended, but some people choose it – I don’t.

There are minor issues or bad news that can be managed in your monthly and quarterly updates. Like missing your quarterly numbers by 3-4%, or if you’re having a tough time recruiting people, or if a particular distributor who was contributing a large part of the business dropped you for reasons unknown or customer complaints. These are the kinds of things you can manage in your monthly and quarterly updates.

However, certain kinds of news shouldn’t be neglected. These should be communicated to the investors immediately. If a co-founder has left, or one of the co-founders has been diagnosed with severe disease and will not be available for the next 6-8 months, or your fundraising efforts are falling through, or a significant client that contributes a substantial chunk of the profit has left. These are the kinds of situations that need to be communicated to the investors immediately, preferably not on e-mail.

What I recommend is organizing a conference call or an in-person meeting. Explain what is going on to the investors face to face, in a way that is direct with no sugar coating. Be humble about the fact that things have gone wrong. Don’t try to play up things to avoid the investors being angry at you. If the situation is terrible, investors have a right to be irritated and will point out things that could have gone better. You should take criticism in your stride as you’re expected to execute successfully. Take responsibility, be direct, and you’ll find that investors will probably come back with solutions for you to manage the mess.

In adverse situations, you should have a turnaround plan. I would recommend having one if you’re going to have a face to face meeting. If you don’t have one, let the investors know and get back to them in a few days or a few weeks. There may be some questions the investors have, for which you may not have the answers. I would recommend not making up turnaround plans on the spot. If you don’t have the answers, tell them. Mention that you’re going to get back to them in 5, 7 or 10 days (or whatever number of days you believe you need) but ensure that you keep those promises.

Delivering bad news should not be difficult. It’s only tricky when you don’t want to give bad news, and you feel hiding is the best way forward. But it doesn’t solve anything. In fact, it only leads to the problem of getting bigger. If hypothetically, the company shuts down, and investors find out that you knew in advance, you could find yourself in a hot legal soup.

I’ll leave you with that, and I would love to know how some of you guys have shared bad news in the past. Also, if you have tips for other entrepreneurs, do share them in the comments.

Advertisements

Video Of The Week: Vishal Krishna Interviews Confirmtkt Founders

A few days ago, I saw a Facebook live interview of Confirmtkt’s founders, Dinesh & Sripad. Early on, I had led a round of investment into Confirmtkt and also sat on their board for a few years along with Pravin Agarwalla.

Back then, we both went through a very tough phase with the founders (and the venture), which the founders recount as something that gave them “sleepless nights” in this interview. While I quit the board last year, my eyes were full while watching the two of them. I’d credit the interviewer, Vishal Krishna for bringing out this story so well.

Vishal’s interviewing style is awesome. He is extremely well read and well-prepared with questions for the people whose venture he is interviewing. This thorough preparation helps him delve into the deeper delicate, intricate details with the interviewee that would otherwise have been missed out. I can vouch for this because he has interviewed me before and dug out some details that even I had long forgotten.

The video focuses on Dinesh and Sripad’s journey of becoming responsible and established leaders who grew Confirmtkt into a category leader and a sustainable enterprise. This is what makes it my video of the week as well as the inspiration for my blog post tomorrow.

24/2019

Video Of The Week: Fyre- The Greatest Party that Never Happened

This week’s video was recommended by Karishma so a big thank you to her!

Fyre is the ultimate tool for entrepreneurs to learn that scaling before having a miniaturized working model is akin to gambling with the business. It should open the eyes of investors, entrepreneurs, managers and employees that scaling is the easiest part of building a venture. The billion-dollar question that needs to be answered is – can your business deliver consistently and profitability at scale?

Fyre also answers the question of how doing too many things can eventually lead to doing nothing or (in this case) land you and your business in legal hot water. I believe that Fyre’s founder, William “Billy” McFarland may not have intended to defraud his customers (unlike his investors, who he definitely did). It seemed as though he wanted to do everything that his marketing campaigns had promised but just could not control the monster that he built. Eventually, he went against the advice of his key team members and kept up a charade that transformed him from a boy genius to Mr. Evil.

This brilliant, moving and shocking documentary is available on Netflix.

21/2019

Video Of The Week: Who has earned the right to advise an Entrepreneur?

I am enamoured by video content, so I have decided to restart the “Video of the Week” section which highlights the video that made the most impact on me in that week.

This video was uploaded by Y Combinator on the 9th of January, but it popped up yesterday in my twitter feed.

There is a lot to learn from this video for budding entrepreneurs that are at various points in their entrepreneurial journey. Khosla’s observation that a venture’s journey is not linear but zig & zag and his analogy comparing it to climbing Mount Everest was very impactful.

Another important point was at the end when Khosla says, the investor is like an “employee that you cannot fire” therefore founders should choose their investors wisely.

The point that was most hard-hitting, however, was when he talked about whether the entrepreneur is building a “zero-million” or a “zero-billion” dollar company and the clearly visible difference in each one’s approach towards building their venture.

14/2019

Gir’s Sons have India Roaring, on the Cricket Pitch… and Off it Too!

Investment advisors have been selling the potential of 100 crore Indian consumers to investors across the globe for the past 20 years with excellent success – for the advisor. But, investing in that potential has always led to investor gloom and doom. The potential was always there but somehow India always found a way to overpromise and underdeliver, just like the Indian cricket teams that left with tremendous promise for Australian tours, but those expectations almost always came crashing down like a house of cards.

However, today’s India is writing a new script, in cricket and as an economic powerhouse. The potential of 100 crore wallets that was entangled in the web of black money, oppressive taxation, poor infrastructure and expensive logistics in finally unlocked. Demonetisation, Digital Payments, GST and Tax Compliance reignited the hope that this was finally India’s moment but building out rural consumption points was expensive, and it took years if not decades. Unlike the previous failures, this time the economy and the cricket team had those two pieces that have alluded an Indian victory. Interestingly both of those pieces, whether it is the economy or the cricket team, find their roots in Gujarat.

The ability to battle ahead on the trickiest of pitches, facing the most abrasive oppositions and weathering the relentless media attack requires grit & determination. That role has been perfectly essayed by Cheteshwar Pujara who not only blunted the opposition but took the fight to the opposition while the others built around him. Prime Minister Narendra Modi did the same for the economy. The PM’s economic policies improved throughput of government subsidies to the neediest through the smart utilisation of Aadhar. He filled the government’s empty coffers by increasing tax revenues through higher compliance and bringing in the fear of evasion. He also took the fight to the opposition by calling out their “Accidental PrimeMinister” and allowing his team to build better infrastructure, bail out the near bankrupt banking sector and amicably improving or destroying the relationships with our neighbours.

All this gunpower required a spark to explode from someone who would have the planning, intelligence and the pace to bamboozle the opposition. Jasprit Bumrah did that to the Australian batsman, while Mukesh Ambani’s Jio did that to the telecom sector, forcing into submission. Jio’s introductory offers were like Bumrah’s deadly bouncers, Jio’s fast and extensive network like Bumrah’s yorkers and their strategy to hook a user to their content ecosystem was like Bumrah’s slow yorker to Shaun Marsh, it bamboozled them.

The results that India and the world has been waiting for are finally here. The cricket team is 2 wickets away from winning their first Boxing Day match in history. It is a moment that 560 million Indians can watch tomorrow on their Internet-connected devices, a first too. This maturing of India’s potential has driven a record amount of FDI into the country, almost $40 billion flowing in 2018, a whopping $7 billion more than China, a first again, in 2 decades.

The results have taken time and we have endured pain, but the victory is near and will be comprehensive.

103/2018

Video of the Week: AIWMI Family Summit 2018

Yesterday, Aditya Ghadge sent me a link to a recording of the panel I had participated on with Siddharth Ladsariya, Abhijeet Pai, Aniket Bharadia and Sandeep Jethwani (he played moderator) on Inside Perspectives from the Next Generation Business Leaders at the AIWMI’s Family Office 2018 Summit. I thoroughly enjoyed this interaction because each panelist came from a different vantage point. Sandeep investigated each person’s viewpoint deeply as is expected from the Head of IIFL’s Wealth Advisory Group. I really enjoyed this view and I hope you do too!    

Since I missed out on the video of the week last Saturday I am also sharing the interview of Atul Nishar that took place right before the panel above. It was an awesome opportunity for me to hear a successful entrepreneur like Mr Nishar candidly take me through his journey, the ups and downs, the exits and how the entrepreneur in him is kept alive by backing start-ups. This interaction is pure gold!  

93/2018

Video of the Week: The Crash

Today, exactly 10 years ago a 157-year-old institution, Lehman Brothers, went bankrupt. The reasons behind the Lehman fiasco are well known but this DW documentary focuses its lens on the ripple effects that the unbridled enthusiasm & greed of a few people on Wall Street had on 10,000+ Singaporean small investors.

This documentary is an important reminder that optimism is good but unchecked optimism is a sure-shot recipe for disaster.

There is a historic irony with the 15th September as in 1940 a severely handicapped British RAF turned the tide in the Battle for Britain halting Hitler’s plan for European domination. On that momentous occasion, British Prime Minister, Winston Churchill had famously said, “Never in the field of human conflict was so much owed by so many to so few”

Unfortunately, Winston Churchill could not have imagined that just over half-a-century later so few would owe so much to so many.

90/2018

Video of the Week: The Undisputed King of Bollywood

I must be honest that I was not a big fan of Akshay Kumar through most of my teens. His movies centred around his martial arts abilities and he had typecast himself into a brand of cinema which I did not identify with. Then something happened 10 years ago that altered the actor’s career and this transformation & success formula should be a case study at the top management & entrepreneurial schools in India as it pole-vaulted him to highest paid Bollywood actor (7th highest in the world).

Akshay has been a vocal critic of movie schedules that can take 300-400 days and he adopted a simple success formula which I found is on the lines of the lean start-up mentality.

  1. Akshay completes his movie schedules in 60 days (Housefull 3 was done in 38 days!) which significantly reduces the carrying cost of the movie i.e. the path to profitability is significantly reduced.
  2. He releases 4 movies a year, therefore, increasing the number of shots he has at delivering a hit. Compare that to the competition that does 1-2 movies a year, therefore, has to maintain a near perfect record.
  3. The more releases per year also means that Akshay gets to read the audiences’ pulse regularly and he can adjust/alter/update his next product iteration thereby catering to his customer’s (read: audience) preferences much faster.
  4. The success of this simple success formula can be gauged by the fact that Akshay has delivered 100+ crores in box office collections every single year since 2007

The inspiration to do this research came from two videos wherein the actor provide an insight into his journey, both are must watch videos!

The first one is in Hindi

The second one in English

84/2018

Video of the Week: Sell in 60 Seconds on Coutloot

The awesome team of Jasmeet Thind, Mahima Kaul and Vinit Jain have been making serious progress at Coutloot, a C2C fashion re-commerce platform.

This is a recently started online video ad campaign that alludes to the simplicity of selling on Coutloot.

I’ll let Jasmeet explain what Coutloot does.

Disclosure: Coutloot is an AIV portfolio company

78/2018

3 Reasons Why I Believe OLA Has Lost Its Mojo

Just last year, I was writing praises of Ola’s product mix that allowed it to have the upper hand over Uber. In fact, I was so happy with Ola’s product strategy that not only did I endorse Ola Select’s benefits to all my friends & colleagues and open a corporate account with them but also swore to use OLA exclusively in India. However, in the past few months I have consistently found myself choosing Uber over Ola and (after much deliberation) I can hone it down to 3 main reasons.

1. Ola Select No Longer Offers a Compelling Value Proposition

For those who don’t know, Ola Select offers 4 main benefits:

  1. Ride without Peak Pricing
  2. Skip Booking queue
  3. Prime at Mini-Fares
  4. Free Wi-Fi during the ride

Initially, Ola used to charge Rs. 499 per month to avail Ola Select. Gradually they started increasing this price until it added up to a whopping Rs. 1999 a couple of months ago.

Since my monthly commute costs less than Rs. 5,000, the steep increase in the subscription cost was economically unfeasible. I felt as though Ola’s management was price gouging me and it broke my trust. I heard similar gripes from many who were regular Ola Select customers.

However, when I opened my app today, I found a discounted monthly subscription price had dropped to Rs. 1299, at the cost of capping the surge protection at Rs 75 per ride. It looks like someone at Ola noticed the drop in the subscriptions and attempted to salvage it with this move.

If I assume that Rs 75 equates to a 25% benefit per ride, then it works out to an average bill of Rs. 375 or a 25-kilometre trip which is rare for someone travelling within Mumbai (or most cities except Delhi & Bangalore). Even if I assume that I took those many trips in a month, it would still take 20 rides before the subscription paid for itself and 40 if I wanted to get any additional value out of it. Therefore, Ola Select would make sense to someone who was regularly spending Rs. 15,000 (40 x Rs. 375) on Ola per month – a rarity in Mumbai.

The biggest guffaw of this pricing strategy is that the normal Ola rides are now directly competing with Ubers prices and often, I end up opening both apps to see availability and pricing before I book my ride. This is something I do not recall doing when I was a Select member.

2. Untrained/Greedy Cab Drivers

The quality of Ola drivers has been steadily dropping over the past 12 months, but it has dived off a cliff over the last 3 months. On multiple occasions, drivers have hesitated to arrive unless they know the drop off location or cancelled the trip if it is short or payment isn’t going to be made in cash. Off-late, I observed the most alarming trend in Hyderabad & Bangalore wherein drivers want me to cancel my trip after they arrive and settle with them in cash for a discounted rate below the original trips pricing quote. Clearly, something is going on at Ola that is causing such drivers to be recruited and retained.

3. Filthy Car Quality

Ola’s fleet is ageing rapidly. Their quality assurance teams seem to have gone on vacation since the tablets have stopped working, in-car Wi-Fi is non-existent, the cars are well dented, have their paint scrapped off in many places and have not had their interiors cleaned in months. If Ola assumes that their riders will take 25-kilometre trips in these vehicles, the least they can do is to ensure that their vehicles are providing a comfortable commute.

The overall Ola experience has left a lot to be desired.

The loyal Ola users are now looking for better options and it isn’t a coincidence that Uber has newly launched its Premier vehicles campaign. It assures the rider that they shall enjoy new vehicles and highly recommended drivers for their trip – at no monthly cost at all!

Time to buck up or it’s going to be hasta la vista, Ola!

72/2018