Justin Kan is always inspiring.

Justin Kan is doing a new startup - IamExec. 

In his own words. This is the right kind of motivation. He may or may not succeed, but he simply cannot be accused of lack of inspiration:

" I think Justin.tv / TwitchTV will already make me very wealthy. I didn't start Exec to make money. I started Exec because I want to build something that will take over the world. I want to be Facebook of labor -- not as in "a company that opens up your social graph around work" but as in "a company that fundamentally changes and expands the category it is in, and becomes ascendent in that category".

That said, it is easy to talk. Watch what we do and draw your own conclusions."

Bonus:  

Follow-up: Don't sell Tech to Indian Businesses.

I wrote a bit of an incendiary post where I suggest NOT bootstrapping a software startup targeting Indian Businesses/consumers. The post got a lot of page views. A tiny vocal minority picked a few strawmen to attack and nitpicked on the style. A lot of entrepreneurs agreed, sending in notes. My writing left a bit to be desired. I wrote the article quickly and didn't do peer review. I blog mainly to reason and to think. Still that is no reason to not write full sentences and with clarity.

I didn't see a single well reasoned argument against what I wrote. A logical inference could be, most startups targeting Indian Businesses/consumers are raising VC, making my argument moot. 

I am not positing that raising VC is the right way, or bootstrapping is the winning way. I am trying to identify factors which are beyond the bootstrapping entrepreneur's control while attacking a market.

There were subtle takeaways which other entrepreneurs agreed with (I didn't write them explicitly in that post): 
 - If bootstrapping, target a more oxygen rich environment. You can target the US markets which have a higher capacity and willingness to pay for technology today. $49 per month for software for an Indian small/medium business is expensive (go ask target customers).
 - As a bootstrapper, you want to ride other people's waves. (Attributed to Sam Altman). He was more general: "As a startup, ride waves."
 - Ramen profitability - As an Indian bootstrapper targeting North America, you have a better shot than your North American counterpart. Third world expenses means profits of $5K per month for two founders is going to be ok for you to not worry. In the US, equivalent would be $20K a month for two. (I am assuming here that you and/or your co-founder are technical, and you can create the product).

There are issues - How do you identify needs for which US business would pay?
I would say build technological solutions have no barrier to identifying and understanding needs. Case in point is MailGun. Handling email at scale is as general as it gets. Anything plumbing is really a fair game.

Also as a bootstrapper, try to do a Subscription businesses. There are many reasons: Customer acquisition costs are high, so once you get a customer you don't have to chase after them every year to buy an upgrade. A small monthly ticket is lower risk than a large upfront cost. You will remain laser focused on great customer service and retention.  There are a few very good blogs on the SaaS and subscription topic. They focus on pricing and cost of customer acquisitions. I'll try to dig them up. 

Again, its not all doom and gloom for Indian markets. I am not smart enough to tell you to not do what you think is best. Software will eat the world [Marc Andreessen's writing]. 

------------

[Mukund Mohan has a good blog post on the different nature of the Indian market. While I don't agree with him 100%, its a good post to read backed by data.]

The prohibitive cost of bad customer service.

I have come to the realization that customer service is one thing you cannot afford to be a loose end in your startup.

Everyone knows the benefit of great customer service: you win over customers, secure future business, referrals and better LTV. Everyone knows this. Still we sometimes don't deliver. I am guilty of mistakes just like anyone else.

With bad customer service: customers get angry because they feel powerless in a situation. They have invested time and/or money at this point. They are expecting you to deliver.

A small percentage of the customers are truly plain PITA. They try to not pay, and/or complain a lot. Its easy for me to react badly over the phone. So, I prefer to do customer support over email. I try to get to the root cause rather than argue and keep the tone civil no matter what the provocation. (Much easier over email, also I can fix the tone, intent with the drafts).

Moving on to the more common case, where the customer has a justified complaint or an issue she needs help with. I have realized that a timely response (not automated), telling the customer of the status is a great step one. (Automated response is fine if you have truly high email volume which is not scaling.) Even if the issue isn't resolved, if customers feel they are communicating with a human, the situation improves.

Running a free service has this problem of the "browser" crowd using the service and expecting quality customer service. Servicing them is expensive as a startup and that's the real cost of freemium IMO. If you are able to up-sell very well, then this might be worth the trouble. Otherwise it might be a losing proposition. But still do this until it stops scaling. Your free customers will fix your processes, code bugs, etc etc.

Finally, the KEY thing to realize is Customer acquisition is SUPER-expensive. Customer retention is what will really keep you profitable. So make sure you focus on customer retention A LOT. Referrals, LTV, everything. Make it your religion. We are doing it with ClearTax, here you can file your Income Tax Return online. Give us a whirl. :)

Blind Spots

Mostly a regurgitation of Paul Graham's schlep blindness essay.

The concept is amazing. Once you accept that there will be blind spots in your thinking and working, you are much more open to fault lines.

I continue to explore new ideas. Rejecting ideas on the basis of the schlep is now out. (If at all, my subconscious can allow me to get to the real schelpy ones). Most of the work in ClearTax has been schelpy. Also Taxes in general are seen as a schelp. (I actually like exploring the design of the tax system and the shaping of people's behavior via taxation. My Dad used to tell us about this stuff as kids.)

I dislike working on certain types of things. Email campaigns being an example (newsletter type stuff), SEO being another. @kingsidharth and Dad's constant prodding and a bit of open mindedness has changed things. Now the more schelpy a task is, the more I explore it (potentially leading to a new idea).

The other thing is, I see it in others too. Which also informs choices in hiring/partnering up with them.

----

There's a minor insight I would like to point out:

Most people have a lot of energy and exuberance when they start working on an idea. At this point most schleps are undertaken with great enthusiasm. Later as the rubber meets the road, stamina starts to run out. Product/Market fit isn't achieved in the first go. More schleps loom as marketing, pitching customers, sales and support take priority over programming work. Many give up at this point.

So one amazing hack is to front load the schleps. (Most hackers I know don't see programming as a schelp.) To front load a schlep, launch asap, so that you go out and pitch your customers and doing deals.

David Rusenko of Weebly.com has a great post on this. (David is this super awesome person, who went out of his way to help us stay alive and keep shipping. And he hasn't ever met me.)

On writing.

From Henry Miller on Writing, his 11 commandments:

1. Work on one thing at a time until finished.
2. Start no more new books, add no more new material to "Black Spring."
3. Don't be nervous. Work calmly, joyously, recklessly on whatever is in hand.
4. Work according to Program and not according to mood. Stop at the appointed time!
5. When you can't create you can work.
6. Cement a little every day, rather than add new fertilizers.
7. Keep human! See people, go places, drink if you feel like it.
8. Don't be a draught-horse! Work with pleasure only.
9. Discard the Program when you feel like it -- but go back to it the next day. Concentrate. Narrow down. Exclude.
10. Forget the books you want to write. Think only of the book you are writing.
11. Write first and always. Painting, music, friends, cinema, all these come afterwards.

Don't sell Technology to Indians - Businesses or customers.

[Link-baity headline. Really a much more nuanced discussion. Your comments welcome.]

As an entrepreneur we are here now in February, 2012 in India (My startup is ClearTax, which lets Individuals e-file their Income Tax Returns.) 

So here goes the question: Have there been Start-ups that have built $20M+ business in the Indian industry making and selling software products within 5 years to Indian Businesses. NOT SERVICES. No custom software, just shrink-wrapped SaaS, Mobile apps or the anachronistic desktop.

A company which has crossed 5 years of existence is no longer a start-up and is now a small or medium business. I hope to see exceptions emerging, but data points to very slow wealth creation, over very long gestation periods (5+ years). 

So this doesn't play very nicely with big Venture backed plays where the exit lifetime is when the VCs have to give returns to their LPs. 

Looks like Indian investing has to be done differently. Also when that start-up outlier comes, Indian entrepreneurs will then do 100 such outliers immediately after that. But we have seen businesses built off the backs of decade long rounds of investment, value creation and persistence. (Shaadi, Naukri, MMT)

Immediately after fast-followers followed at maturity to squeeze the juice (BharatMatrimony, ClearTrip, Yatra). Unless strong network-effects (Two-sided marketplace kind of plays), that would mean  consumer plays are best approached from a brand building perspective?

So should I be investing my time and energy in Technology in the country? The data points to No. Offline infrastructure seems to be of greater value? Building a courier service that can do awesome fulfillment is in my opinion 10X better than starting a e-commerce company today (with hype and unattractive customer acquisition price points - TV ads? really?). 

Monthly active uniques in the country is 46Million as of today. Not a small number (Tax filing population is 50 Million). Most of them haven't transacted online. Looks to me that I am missing the benefit of the great Internet distribution. 

The shift will happen eventually. We'll also be lead indicators. 

So what am I saying:
1. Internet Distribution = not enough yet. Mobile penetration = quite good, carefully evaluate devices and their ability though. 
            - Discovery on the mobile is a world-wide problem.
2. Payments on the Internet = not a solved problem. Mobile payments = most likely will nail it (like Kenya). [Really, WTF in this country. Fraud can be a huge issue, but regulation is up its ass].
         - Monetization on the mobile: Operators will take 60-80% of revenue. Your bootstrapped startup won't crack a deal with Airtel unless something magical happens. Operators are like the Government.
         - All other payments besides operator aren't promising today. 
3. Discretionary Income is not spent online. It is spent at Cafes, Restaurants. The emerging middle class wants to go out and have a good time outside. Real life. Almost all restaurants in my neighborhood have capacity issues on the weekend. (Mostly true for the rest of the world too. Per capita restaurants in the US are much higher. Yelp much?)
4. The iPhone hugging, always connected regular people like the US aren't present in India. Eventually it'll change. Your bootstrapped startup may die till then.
5. People aren't used to paying for software. Not even businesses. This will take a while to change. SaaS changes things dramatically. Reliable Internet connectivity first though.
6. Expectation of "Services" and pricing at your business costing. Unless you figure out your dramatic growth customer acquisition engine, fast followers will pop-up who are hungry to earn a small chunk of a small market pie. They will put up a very shity site with front-end putting myspace to shame. Your Business customer won't notice the difference.

"Green shoots": Hundreds of smart kids are reading what PG is writing. They are starting up, two kids at a time. Magic will happen.

But now I am of the opinion. Figure out an unnatural advantage. Take it. Otherwise raise VC from day-one for Indian startups. Don't bootstrap because longer runways are needed.
(I don't like Indian incubators for many reasons. Don't want to elaborate here). 

EDIT: A few people asked, so: ClearTax is doing quite well, we make decent money. We do offline payments, render 'human' services to high net worth Individuals and Businesses. Businesses DO pay for services. They don't easily pay for software.]

Learning Ruby (RoR) the hard way?

I am fairly fluent in Asp.Net MVC. (Seriously how bad is Microsoft at branding). This is Microsoft's RoR clone/poor cousin. I got fluent in it while building cleartax.in
ClearTax started its life as a desktop product so we used .NET and it was natural to use MVC for creating the product.

I find myself productive and its quite easy to churn out a website or two in very little time especially using AppHarbor. (Heroku for .NET). Case in point is Hackers and Founders, Delhi
Also I enjoy using C# 4 which is fairly functional and has dynamic as a data type for quickly creating non-static data types.

Now I am coding up something new and learning Rails. I am not too familiar with Ruby. Rails 3.1 is very different from the early Rails I had experience with. Everything's like "new black magic" compared to Asp.Net MVC. Also all these awesome and quirky gems. So life is hard again where I am learning a new language and a new framework and getting a simple app up as soon as I can.

Ignore survivorship bias.

Mostly a note to self.

Most startups fail. Startups which are kicking ass have a bit of fortune. Along with other things they do well. Like putting together a great team, mentors, investors besides the product and the business.

So we hang around, work hard and create our BASIC interpretors waiting for our day in the sun. 

I am writing this to myself: No negative emotions. 

 - No fear of failure. All my basic needs are covered.
 - Three years from now if I don't make any money, I'll not be bitter. Salary will be available for the next 30-40 years I'll live. 10% of my life can be devoted to self with zero issue.
 - Ignore survivorship bias. I'll never be jealous of startups which are doing well.

So back to work now. Customers to find, talent to recruit and make our own fortune.