Bootstrap in Bangalore

Before we go looking for that place to start up, lets just explore if we are ready for it. I was trying to be non-linear for the blog unlike the book, but seems my thought process is working better linearly.

My target audience is people who have been in a job since 2+ years and want to start out. A lot of people plan a startup in college also (I did) and very often it doesn’t go far (mine didn’t). I would recommend if one is in college, its a very good idea to try a start up especially one’s which can be executed in the hostel room and college infrastructure could be leveraged for the same. The best would be if students are the target customers since they are all around you. So this gives you some idea about the bootstrapper’s mindset: look around, think local and leverage the resources which are easily available. Bootstrappers love free resources which are aplenty in college – free bandwidth, free labs (especially if you can convince the prof in charge of labs to give you the keys and instruct assistants to work for free), free hands (a bootstrapper should be able to convince fellow students to help just as a favor or just for getting the experience) and free time (its not like you are sitting at home without a job, you are in college anyway and trading time from boozing late nights to starting up isn’t a bad trade). However, starting out immediately after passing out is a bad idea. You have just lost the ecosystem you were used to all this time. You probably have a job in hand which can give you valuable real life experience and create a professional network which will be of great value later when you start.

If you are already in a job lay some ground work before you set off on the bootstrapping journey. Bangalore is a talent scarce market. If you are serious about starting up your first priority should be to be an outperformer in your existing job. In a talent scarce market it will make you a very valuable resource. It allows you to establish credibility with peers and seniors, which could be very important when you start up. It could also give you some bargaining chip for becoming a consultant with your existing employer. Becoming a consultant helps you in many ways. Due to strange tax laws as a consultant you can claim many genuine allowable expenses like home office, travel and phone greatly reducing your tax burden. Only a 10% or so TDS (according to budget 07) will be cut by the employer leaving you with extra cash for a full 16 months since the tax will be paid the next financial year September. Both the above things allow you that extra dough every month which you can productively deploy in your bootstrapping efforts. Usually Indian employment contracts bar you from doing absolutely anything else other than your job. In my opinion work done by you on your time and not deriving from or related to your day job is morally yours but becoming a consultant very neatly absolves you from contractual obligations if any. Since any extra cash is going to be god sent – turning a consultant will allow you to get all your provident fund that you never knew you had. PF is your retirement money and considering the risk taker you are, I am sure you will figure things out on that count. It takes around 3-4 months after leaving your employment status to get the PF.

This surplus cash mentality has to pervade your lifestyle. As a future bootstrapper you have to count every paisa you can get your hands at, be it saved/deferred taxes or restructuring your lifestyle to become frugal. When you start focusing on your venture you will thank your stars for the lower expenses you have got used to. It can be in the form of lower rental, or cheaper eating out habits (say hiring a cook instead of making neighborhood restaurant’s richer), controlling your phone bills etc. If some of the things feel like sacrifices – did anyone ever say starting a company is going to be easy! Basically you put yourself in a high earning and low spending mode. Your savings should give you some seed capital and the frugal lifestyle will ensure that you last longer. The number one reason for start ups closing shop is that they run out of cash. Make sure you are the falling in that trap.

If you have the mindset, consider investing your savings wisely. This improves your financial literacy which most likely your current job doesn’t hone in any way. This is not a financial advisory blog but just one piece of advise: stocks are risky and you don’t want to ruin your start up plans by putting all your potential seed money over there. If you are not sure about investments just stick to deposits.

If you are a star employee (try and be one if you aren’t) you can also ask for a more cross functional role. If you are working in a big company, most likely you anyway finish your weekly plate of tasks in 2 days and the rest of the time is eaten by systemic inefficiencies. Try helping with per-sales or HR (designing a recruitment test, conducting a campus interview). The more departments and functions you are exposed to the better it is since in your own start up, you will be running many of them initially. Your existing managers will appreciate your initiative and give you a raise, which you mustn’t spend in a party If you are lucky to be already in a small company, most likely you are already exposed to many more things. Keep at it.

The most important thing is to identify the partners with whom you will start with. It would be great if you have already worked with them since you know how they perform under pressure and how’s the chemistry with you. If you can’t find any partner to join, you should reconsider the start up decision. If you can’t sell yourself and your passion to colleagues or friends, selling it to customers or investors later is going to be 10 times tougher. Typically 2 partners is ideal at inception. You can’t form subgroups and only have to convince one person at a time to take decisions. Speed is your friend when you are starting and small number of decision makers help. I think up 4 partners is okay if you can clearly split responsibilities (Sales and Development – as a start up don’t waste time on anything else) but 5 is too many. As you become successful you have to attract more people but thats when you have to expand as a company.