Flickr Badge

Tuesday, July 24, 2007

Post Proto roundup

I have a lot of thoughts to put down after attending Proto. About the event as such, it went off really well. Apart from a small hiccup during the first two hours, the event was smooth and the feedback has been very positive. I had an opportunity to meet a number of interesting startups. It's great to see so many startups here. I really do feel the startup ecosystem growing every month.

Alok Mittal makes a good point in this interview when he says that many of the companies need help with marketing. But isn't that what the VCs are there for? To help companies plug holes in their execution? If a company has everything in place and is doing great, then they usually don't need outside investment. So almost by definition, if someone is at an event like this, they realise that there are some areas where there is a deficiency and that they would like to fix it.

Was Rahman from Dolphin Advisory had another good point when he said that VCs tend to look at companies through a fixed narrow lens. This is so true, and you can read more about it in this very interesting post.

I can relate to that post very well because the company I worked in previously went through two rounds of VC funding. After the second round, all the talk was about scale. How can we scale this, how can we scale that. Suddenly we hired a ton of people (relatively speaking). Never mind that there was no management structure in place. Never mind that things were going out of control. I asked that we grow my project team slowly because adding too many new people to the project was being disruptive, but the team was grown anyway. In a few months, the team went from 4 experienced people to 11 mostly freshers. I later heard that the board wanted to "scale" the development. But adding so many at one go is not scaling, it is disruptive. I don't think the board understood that. When I asked to pause hiring for a while, I heard that the board was questioning why we had slowed on hiring and that they had funded us to scale, not to sit on the money. I'll leave you to figure out how the story ends.

So Was has an excellent point when he says that the Silicon Valley model is not the only model around. There are other ways to develop and grow a business. In some cases, going for VC funds is absolutely the right thing to do. There are times when you need a lot of money to execute on a plan, and at these times raising money through VCs makes a lot of sense. But often there is no pressing requirement for huge funding, in which case you need to think hard about whether going the VC route is the right thing to do.

No comments: