Entrepreneurship as a Learning Journey

The enormous learning is often a by-product of any entrepreneurial initiative - either at an Individual level or at the corporate level - an exponential rate of growth in ones learning is guaranteed. While one could argue, that any learning is extremely personal, there is sufficient generalizability in the pattern of events that lead to the learning; and so there is a great amount of categorization of learning possible from such vast and varied experiences.  

Entrepreneurial Learning is simply the learning accrued as a result of entrepreneurial venturing. Such learning could be categorized based in multiple ways - based on the process of learning, or the target of feedback, or agency of learning etc. Looking at any single dimension would make the understanding desperate and wanting for comprehension. 

Basing on the feedback from learning contributing to an enhanced understanding of one of these factors, I seek to categorize entrepreneurial learning to be about a:

1. Learning about self
2. Learning about Venture
3. Learning about Interfaces

While we might gain an understanding of the self, or business, or interface management from many individual experiences; Entrepreneurial experience definitely contributed to learning about all three. May be the following diagram could capture this point.

To help understand the context better, let me give you an example from my own experiments. I shall use the same as we move ahead to help you relate with the categories.

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My first start-up experience in brief:

My choice of venturing out on the entrepreneurship journey was based on gut-feel. When I had left my first job at efi to pursue my MBA, I was definitely contemplating about entrepreneurship sometime in the future. My intern-ship at a Startup gave me the confidence to try it out myself. Even before I had completed my PGP from IIMB, I was already on the streets trying to sell products/service and see if there are any potential buyers. One of the first realizations I had was about the drastic difference in the markets - Mumbai (where I was doing sales & looking for alliance partners as an Intern) and Bangalore (where I as trying to do a similar act). As I attempted running though the entire educational chain from K2PG (Kindergarden to Post Graduate colleges. Yes - I extended the K-12 norm to even higher levels in the educational hierarchy), I realized there were certain markets where I wouldn't like to work in. 

My closer interactions with the education system got me to identify numerous lacuna in the system itself. I began asking myself if the product I was trying to sells - an assessment tool would do any good to my customers? Would it in any way solve the problem I sensed the system had?. As I thought iteratively, I realized I wasn't feeling comfortable selling a product that I believe wasnt serving to fix a problem. Yes I could go ahead and still sell it an make some money, but if I am not going to be confident about the product I sell, should I even sell it? My doubt took the better of me and I began thinking of different ways to solve the fundamental problem. 

In the mean time, my partners and I thought it was good for us to shift to a focus on the UG-PG, where there was a lot of perceived demand for fine-tuning skills that be useful for the placements. A few months into this and I had a similar doubt - was I trying to polish something where the base material wasnt yet treated well enough and ready?

This got me to consider looking at fixing the problem possibly by being part of the system. I decided to get into teaching - I worked as an adjunct faculty at a few MBA colleges, and also helped a few friends who were trying to work towards improving the quality of teaching at a rural school. This attempt gave me greater satisfaction! 

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The remainder of this blog explains what each type of learning would cover. 

Learning about Self:

It wouldn't be unwise to claim that the only thing that is constant through the journey of entrepreneurship is the entrepreneur. Entrepreneurship is the journey of an individual/team through the ups and downs of conceptualizing, building and managing the venture that one creates. Such an experience is also a journey of self-exploration. The Individual evolves as the venture evolves. As events surrounding the venture unfold, the entrepreneur at the helm of the venture the individual mental fames are rewired from the feedback received. The learning about oneself takes one of the following forms:

• knowledge about ones preferences and dislikes
• capabilities that were hereto unexplored
• strength to endure dejection and failure
• tenacity to withstand differences in opinion
• development of Strategic Thinking

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Reflecting on my experience: 

From the above brief, you would have already sensed that I seem to search for impact of anything I do. If the impact in my eyes is seemingly significant I would love to put in my efforts behind it. This was a realization that I possibly would never have gotten wasn't it for the various experiments I was doing with my career. 

Another learning I have - may be from the constant reflection I have had is about the need for preparation! Yes preparation - I wasn't to who believed in preparing with a lot of effort behind what I do. But, as I began preparing for taking classes at the different schools/colleges, I realized there is so much control that preparation comes in with. I today swear by the need for preparation - preparation not for a specific task, but more to enhance my capabilities. The tasks and challenges might be different so specific preparation is only the tip of the iceberg. It is really the work I perform on my capabilities - sink in more experience that makes be appreciate what I really need to focus on.

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While the learning about oneself is an important and significant portion of entrepreneurial learning, the individual entrepreneur also learns significantly about venture management. It is true that this experience of managing a venture would be complementary and supplementary to ones own journey of understanding oneself. This is a complex area and I guess I am better off staying away from it - given the causal ambiguity involved. The next section looks at venture management and the learning accrued therein in greater detail. 

Learning about Venture Management:

The venture an entrepreneur creates is the embodiment of individual aspirations, and commitment towards the venture creates attachment that is often the source of effort one puts towards developing capabilities suited for the venture and its subsequent growth. 

• Business Model Development
• People Management
• Financial Management
• Product Development 
• Operational Management and Improvements
• Marketing/Sales & Distribution Management

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Reflecting on My experience:
While trying out the various experiments with venture types to see which was the specific forms of a firm that might be suited, I realize the benefits and drawbacks of each of these. What form suits what stage of the venture. 

There were also experiments on the business models that I could think of for the venture. While there wasnt any single business model that I could scale up - since I havent been with my own firm for that long, I believe I have seen quite a few firms experiment with their business models while I was experimenting another career move as the Manager(Ops) at NSRCEL-IIMB. I picked up a few key skills to see when to pivot/preserve an existing business model; when to think of scaling up etc.
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The description above is extremely venture focused, and isn't complete without mentioning about the learning that emerges from working at the boundary/interface between the venture and its environment. The next section looks at this in greater detail. 

Learning about Interfaces:

The growth of a venture is not a lonely journey. Interacting with the environment is a crucial part of venture growth. Sales and Marketing are not just the only avenues of such external interfacing, it moves beyond to realizing the negotiation and control one can exert in the context. Following is a list that merely scratches the surface, there are definitely more avenues where such interfacing would happen. 

• Raising Finances/Investment
• Structuring Vendor/Customer Agreements Deals 
• - Terms of use
• - Privacy agreements etc
• Intellectual Property protection
• Media Interfacing
• Managing Exits

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Reflecting on my experience: 

I must admit I havent had the experience of raising funds from external sources, however I have worked closely with a number of firms at NSRCEL in the fund raising and disbursing process and have got a good appreciation of how deals are structured, what form the key clauses, what is negotiable and non-negotiable clauses etc.

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The above discussion tried to categorize the learning based on the feedback received from the experience during the entrepreneurial journey.  To summarize the following diagram would be useful. 

I know, each of the topics above could have an in depth blog in their own right, may be its something I could do later. This discussion however leaves us with an interesting set of unanswered questions - Can we capture this huge variety of learning in some form and use these to grow the entrepreneurial ecosystem further? If yes how do we go about doing this? Can there be any agency that attempts to capture and transmit such learning?

I attempt to answer these questions in my next blog. Hope you enjoyed reading it - do feel free to write back to me or leave a comment with your thoughts on the topic. 

The Freemium Business Model: as an affordable loss strategy of founders

The Freemium business model is one the most commonly used revenue realization streams by the companies offering web-services. The promise of a large user base, and cross-diffusion of free users to the paying customers; makes freemium the most sought after business model in the internet domain. The utility of this model, however, is not without concerns - Ash Maurya  a lean methodology proponent, in his land mark book highlights the drawbacks of using this model by a start-up. In this blog, I extend the conversation on Freemium as a business model beyond the drawbacks suggested to look at it from the lens of effectuation theory, and use the affordable loss principle to explain the wide spread usage of this model in the web-service industry. 

The term 'Model' refers to an abstraction of the a real life phenomenon. The "business model", is then a abstraction of the way a business operates. Wikipedia[1] defines Business model as: "A business model describes the rationale of how an organization creates, delivers, and captures value". A business model is simply a plan that the company executes to generate its revenues! There are number of business models that companies could adopt from - I have tried compiling some of these here <<more on business models>>, the explanation of the freemium model elsewhere is here. 

It is easy to note that one often finds multiple business models being used by a single business. We donot include other models in our discussion but acknowledge the possibility and only introduce a plausible reasons for such an approach: Companies operate in a sea of market uncertainty - and plan to reduce this uncertainty in a sytematic way. The companies always attempt to reduce the uncertainty by actively engaging with the environment, anticipating changes and preparing for the same. In these experiments to understand the organization's environment - the company creates various business models which that could not just help the company identify its customers but also serve them better. We could think of these business models then as complementary to each other and assisting the business generate a higher revenue than through individual business model.
 

Returning to our discussion on the "Freemium" business model, we could understand the model as one where  the company gives away a chunk of the offering (product/service - I do not comments on quality) to the users for free and attempt making the larger portion of its revenue through the paid higher end of the services. For example: In a professional networking website like Linkedin, the basic business networking service offered is  for free. Linked in also offers its users are a free access of the - "Linkedin Premium" service for a short duration of time after which the user could return to the free version or cotinue the premium being a paid user.
 

It is not surprising that the conversion from free users to paid premium services is small, but that is one of the means the company uses to generate revenues. I have only highlighted the premium offering from Linkedin, however this not the only business model that Linkedin uses - there are revenue generation opportunities like the advertisements or analytics or query results etc that could be of significant monetization impact for the company.

Reiterating the point I made earlier - the widespread usage of the freemium model by web-service companies gets one to think of freemium being a necessity in the web enabled world than one of the options. After all, users would love to try out the website before they begin paying for the same; isn't it? and, its is but logicall to expect to expect convesion to the paid users category - even if a small portion converts, it would be a significant revenue! The almost zero cost of reproduction of a web service helps the cause.  

 

It is this attractiveness of the model that Ash Maurya cautions his readers - the "lean start up" enthusiasts, against. To understand the caution - lets return to analyzing the Linkedin example in greater detail.
 

Linkedin is a professional networking site - where people connect up with other with the intention of growing in their profession and also engaging professionally others having a similar intent. This professional network has millions of users and without information - finding the connects you might like to engage with would be a herculean task if there is no information about the user is available.  The solution - create your basic profile when you sigh up for the website. The basic information provides to data - that could make networking exciting and useful. To realize the importance of the data - imagine a the website users not update their profile pages! You would not get any "relevant" search results that you could use - If this prolongs for a long duration - the newer sign ups on the website would leave saying - "There is nothing in here that would be of interest to me" and move one...possibly never to come back!
 

Linkedin leverages the free component of its offering to create a valuable data for itself - which move beyond holding the interest of the group together and create a foundation of sorts for the premium services! The large user base acts as the fuel for growth. The psychological attraction to the "FREE" offering is really creating a wealth of data that could prove to be valuable information for the company's operation.
 

Observe here that it is always possible that there are always more unintended and inactive people (lets call these "Noise") to the active people and further a even small proportion of premium service users (lets call them "Signal"). The signal is what we intend to have, while noise is what we need to decrease - there by improving the signal-to-noise ratio.
 

The Lean Startup - pushes the entrepreneur to reduce "waste" by eliminating distractions - and getting a niche that the company could eventually build on. The signal-to-noise ratio, thus has to be very high when starting off and the freemium model could be damaging in this regard. Ash Maurya in his book -  "Running Lean" raises few more apprehensions when using this model as start ups [2]:

• Low or No Converstion
• Low Validation cycle
• Focus shifts to the wrong metrics
• Low signal-to-noise ratio
• Free users aren't "free"

The crux for the lean methodology of starting your venture is - "move from plan A to a plan that works", before running out of resources.

The widespread utility of the model would possibily indicating something beyond the risks highlighted by Ash Maurya. I use the Effectuation theory to potentially explain the large scale adoption in the web-services industry. By this, I don't intend to claim that the drawbacks arent true - it is another way of explaining the phenomenon. 

Effectuation has been found to be a good answer to manage the Knightian uncertainty that one faces. We have discussed this earlier in here, for more on the topic, you could join the online community at effectuation.org. 

Most web-service founder have an expertise in technology, and less often ones with a market experience - which makes the product development aspect of their business relatively flexible and agile to experimentation. Their technical strength is a possible afforbale loss in terms of the effort, this is leveraged pretty heavily by these founders. Note, I am not considering the time and monetory affordable losses at this moment - the entrepreneurs might discount this if they are running these in parallel. Also note that the assumption I have made is one of a purely technical co-founder - if a market oriented founder starts the venture, it might not be same scenario. 

Remember that for a successful business - the technology and market are both mandatory; however the technical founder might trade off the technical provess and patience to gain the market experience here. The othe benefit of the affordable loss approach is that it gets the team going on their venture and not get stuck into the analysis paralysis. They are fighting the real world and picking up the neccessary experience and learning instead of just slogging it out with ideas in the fictious mental space where the assuptions identifications activity become difficult. 

For example, we could think of the FaceMash as one such experiment (I am not commenting on the intention of the developer in any way - I interpret this as an experiment).  The outcome of the expriment was for sure something that even the founders didn't anticipate! 

The early experimentation - help not just identify the underlying current of the business, but also open up enormous opportunities for future growth of the company [Akin to the Corridor Principle]. Recollect here another principle of efffectuation: when life throws lemons at you, make your lemonade.
We see indications that there are a lot of factors that emerged as a consequence of the experimentation mindset. This may be a the identification of the latent need by someone else, or the lack of exclusivity - which could aid the "stickiness" of the website, or the learning of what territories not to venture into. 

The learning from the experiment doesn't limit itself to takeways on features but the interaction with the various elements - which allows identification of new opportunities. Recollect also that the interaction that happen subsequently are equally important - though difficult to estimate apriori the impat of these interactions - they could really mould the direction of the start up. 

All is not hunky-dowry in the journey there are surprises - call them sour lemons if you like - but the entrepreneur and his attitude help take charge and act more akin to the "pilot-in-the-plane" (the effectual terminology), or a driver handling the streering wheel; rather  than the scientist how tries controlling the rocket sitting remotely. You need to realize - you can smash the lemons, extract the juice to make your lemonade! 

What I havent highlighted is the entreprenuerial mindset - the essential components of this being reselience and learning. Its not easy to just let go of something you started off because it isn't functioning as expected. The key is it fix the mind to an affordable loss - instead of optimization of effort (may not work in extreme uncertainty). One has to continuously strive towards sensing the results of an experiment early - fail quickly and learn the most from these experiments. 

Freemium then could be considered one such experiment with an affordable loss and set of metrics that helps the entrepreneur measure the progress with the expectation.   While the expectation correction  and restrategization is a key for entrepreneurs to work on their idea, it is the variety of the experiments that could be beneficial too - one could over a period of time expect to develop an entpreneurial experitise. 

To conclude - the use of freemium business model is definitely cautioned against by Ash Maurya, but its utility might be better understood if one applies the afforable loss lense to see the same experiment.  The key is the mindset one has to develop as an entreprenuer who continuously senses, thinks, and acts.
 

References:

1. The wikipidea definition: http://en.wikipedia.org/wiki/Business_model (Accessed 10-07-2014)
2. Running Lean - Ash Maurya - Second Edition - Pg No 181 - 183
3. effectuation.org

Effectuation - a theory derived by studying expert entrepreneurs

Given the form of Uncertainty that entrepreneurs face when building their enterprise, it was often a challenge to explain how enterprises were built. Prof Saras Sarasvathy (currently working at the University of Virginia - Darden School of Business), explored the question of what is teachable and learnable in entrepreneurship and laid the foundation to the - Theory of Effectuation. 

For those of you who are wondering what effectuation theory is, here is a brief about the theory. But first let’s begin with a couple of examples:

a. Cooking:
 

There are two ways you could go about cooking:
⦁    In the first case you could decide on a specific dish you would like to prepare, look at the recipe, go to the market, get the ingredients, follow the instructions and cook.
⦁    The second case is, you open the refrigerator to see what ingredients are available, think of what you could do with the available means and just begin cooking with the resources currently available.
 

Both these could turn out to be excellent dishes or could go bad. Without giving much explanation, I would jump the gun and call the first approach described above - a causal approach, and the second approach as an effectual approach to executing things. 

I shall fall back on the example later on as I explain the various principles of effectuation.
 

b. Marketing a new product.
 

Let’s take the scenario of a large corporate intending to launch a new product in the market. The typical approach is to define a specific market - segment the market and decide up on the specific segment to target. Finally you position the product that you intend to sell and thus arrive at the specific customer who would buy your product.
 

The whole process listed above, involves a lot of thinking expertise and the product hitting the market is only after a long delay and is often after the project has spent all most all its investment.
 

An alternate approach is to find the first prospective customer, sell the product to him/her, and look if there are more people like the same customer. Once you find a pattern, the segment gets defined automatically, you add in more partners, more segments that could be served and eventually define the market.
 

The first approach is primarily causal, while the second one is effectual in its approach.
Principles of Effectuation
 

The Effectual Theory has 5 principles:

• Patchwork Quilt
• Affordable Loss
• Bird in the Hand
• Lemonade
• Pilot in the Plane

They Dynamic Cycle of effectuation:
 

 

The above diagram essentially indicates that an entrepreneur could begin with looking at what he/she could do, whom he/she know, and then think of what could be done with the means that are currently available at one's disposal.
 

The interactions with the people the network lead one to gain commitment towards the idea that had been suggested. Through the commitments, and addition of stakeholders, the initial idea could transform into a shared goal (which could be extremely different from the initial goal), and also add in new means towards achievement of the goals.

Thus the starting point of the next iteration of the cycle would - who we are? What we know? And whom we know? Though the various alignments of the commitments, the otherwise unlimited possibilities shrinking to a smaller convergent set of means which could be explored there by creating new markets and new firms to exploit the market.
 

How is it different from Causation?
 

Looking at the above mentioned approach, we can easily distinguish it from the classical knowledge being imparted in the causation based approach. Where there is a huge emphasis on prediction, and resource commitment towards achieving the envisioned goal.
In terms of the principles these two could be distinguished as below:

For those who are interested in looking for a good resource, visit: http://effectuation.org/ 

However the suggested guidelines in the effectuation are not without criticism. One of the major criticisms that I find in the theory is essentially the expertise that forms the basis of the theory creation.
 

In my opinion, the effectuation theory derived through the study of experts - would represent a state when achieved. If I were an entrepreneur who has become an expert over 15 years of entrepreneurial experience, with say more than 2 ventures, 1 IPO experience, 1 failed experience, and I am not talking about being a newbie entrepreneur. Networking, framing the right questions to get the commitments, willingness to modify goals rather than means (aggregating means to achieve the goal) and much more form an essential part of the process suggested. Thus, it is more of a state that would be reached and learning through experience forms the key towards moving towards entrepreneurial expertise.
 

A newbie entrepreneur has to spend time in building his network, build the phenomenal experience enroute to be able to effectively apply effectuation as a means to starting off a venture. By following the principles, one could definitely create a business with minimal lop side and higher chances of success - I would say this is like giving a surer way of building the business. 

But, if one has to navigate and the path has been shown, isn't there some interesting learning that is essential to make an entrepreneur ready missing? I guess it is... What do you say?

Business Model - creating a fabric to link the stakeholders

In the startup context, where survival is primary, entrepreneur’s pursuit is one of finding a business model that would stand their firm in good stead ensuring growth and profitability. One doesn’t have to reiterate the importance of finding the right business model or the long term viability of the company. The term "Business model", often used in the business community, refers simply to the way the company makes money through a set of activities. I had blogged about some prevalent business models a long time back elsewhere and here is a link to the same:
http://somanagement.blogspot.in/2011/05/business-model-journey-this-far.html
 

Given the large number of business models, one could easily believe that finding the right one to suit their business would be easy – however this is not to be.
 

Creating the business model is akin to building a tower from cards. The cards are all balanced and mutually supported. The flexibility at this stage is the ability to move the cards around and ensure the balance is in place. Only if the balance is created can the attempt grow beyond a specific size. Once the card tower is built, it’s time to build stronger bonds - think of glues that would make it more permanent.
 

[Note: this glue itself could be a limiting the growth/flexibility, but that’s the game one has to play - You cannot just build a larger tower if you focus on too much flexibility!]

From my experience of interacting with startups, I clearly notice that – attempting to build a business model relies a lot on finding the right balance between the various stakeholder commitments and then synch their acts to make the complete business engine operate without glitches. It is only over multiple iterations of engagement and testing the various business hypotheses that such a structure could be created and controlled through routines/procedures/policy for the business execution. These sum up the entrepreneurial learning and help guide the business moving ahead. Thus, we could visualize the firm’s business model as a fabric binding the various stakeholders in a specify tension through the binding and dependency of the various activities.
 

A natural question that arises here: is the claimed complexity of Business Model creation in a start up really hard? Why not just imitate?
 

Stated differently the question is - there are existing models that have been used, wouldn't it be just easy to start off by imitating a business model? Here is my argument why this many not be easy:

Yes, imitation could give you a head way into starting (a map say), but eventually you have to design and use a business model that suits your business needs - your customers define that. The geographical limitations, the economical situation, the capability of the talent available, cultural context, all have an influence on the business model that finally emerges. Even large companies that operate businesses across the globe cannot expect the same audience and therefore need to modify their model!

Increase the above stated complexity a hundred or thousand times – that is the environment that a start up is dealing with – the haze surrounding the start up is so high that it probably cannot even see a few meters ahead with clarity! The changes of survival for a start up enhance by actively seeking the right partners and steadily creating a business from the idea. The Business model is developed through multiple iterations of this nature.
 

What role does the entrepreneur’s ingenuity play in the process of building a good Business Model?

While some of the factors explained above are definitely important – my observation is that the initial mindset of the entrepreneur and the founding team would defines largely the business scale. While business are built to cater to customer demands, and one could often confuse the existing customer segment size to define the scope, I perceive it as a function also a stakeholder relationship (resources) and the innovativeness with which the relationships amongst the various stakeholders(my opinion on this listed in an earlier blog) are created to derive a greater benefit. 

Recollect: my claim of saying there is definitely an important role the entrepreneur plays and not everything is defined by the customer! The discussion could be extended to other stakeholders like – employees, suppliers, investors etc. (pick up links to older blogs)

In the context of an established organization, the board  has to be constantly on its toes validating to see if they are living up to the market trends or are they defining the market trends else their lethargy could risk a death changing ecosystem. The business model thus has to constantly evolve.
 

It is hard to consider a lot of dimensions of business and it would definitely benefit if there is some guidance on the same. How do we ensure that the business model effectively covers all aspects of the business? 

I feel a very useful tool that most businesses could use is the Business Model Canvas (check this link- http://www.businessmodelgeneration.com/  for a detailed coverage). Here is more pictorial lively representation of the canvas is as blow :)

The various blocks of the canvas help keep in mind the various components of the business in a balanced manner. If the business keeps a constant vigil on these dimensions it would help them identify when business shifts would be needed. The 9 blocks of the canvas:

1. Customers
2. Value Proposition
3. Customer Relationships
4. Channels
5. Key Partners
6. Key Activities
7. Key Resources
8. Costs
9. Revenue

One clear benefit of the canvas is to emphasize the importance of the various blocks and gets the attention of these towards these and focus on these (lest you miss them). 

The Business Model Canvas though extremely useful, has some limitations in the startup context. I guess this would be the subject of another blog keep watching the space for more.

Customer: Choosing a right customer when possible...

If there is a first point in the journey of any startup which I believe is worth celebrating, it is - when a customer sale has happens.

If one is to make an analogy of startups to plants and their growth - this is comparable to the appearance of the first roots from the seed and penetrating the soil - there by enabling the plant to potentially grow utilizing the nutrients from the environment. Everything else, like raising an investment or finding a supportive supplier etc only enhance the likelihood of the possibility of growth - akin to application of fertilizers or support fences etc. The first positive sign a start up venture surviving the harsh environment and growing into a viable initiative is when the first customer sale happens.
 

The start-up environment is extremely dynamic, and with many different growth avenues available, it is possible that start-ups could easily be confused about the way ahead. The newness of the start-ups enable them be easily mold them for good into a position they might not like to be in. While one could rationalize these as being defined by the market, I also believe there is a sequence which the entrepreneur could try before accepting being molded by market consequences than by organizational choice. I would love to believe that start-ups though liable to these are not as helpless in this pursuit, and there could be a better logic that product start-ups could benefit from.
 

[A word of caution before I move further: what I say here might be most relevant to the high - technology focused product start up than others. But, I am confident that, over period as startups mature, they would like to get in to a position of advantage, and these suggestions would still hold at that point.]

Quick and relevant learning is what I would call the Swiss knife that entrepreneurs should possess when they intend to build their venture. The skillful application of the Swiss knife and its various knives plays an important role in the start up's survival. Given the relevance of learning, it is most apt to focus the start up's customer acquisition and growth plans with a very strong base of learning embedded in it. This is also the underlying theme that I suggest in this blog, and also forms the source of some of the suggestions I make here. I also assume that most of the companies here are relatively growth oriented and building global products.
 

Suggestion 1: Customers from a Developed/Advanced Nations
High-tech product companies from developing countries who are interested in creating global products are better off focusing their efforts on acquiring customers from developed nations like the United States or the European Countries. This approach gets multiple benefits; some of them are listed below:
 

a. Most developing countries have an ecosystem that is not completely ready for the products that these high tech start ups are offering. In such scenario, the growth oriented entrepreneur who often attempts to create something innovative, could be satisfied by making a product that satisfies the local need. (It is almost like believing that local maxima could possibly be the global maxima!)
 

Move beyond the boundaries of the developing market and focus on competing in an international market. (Yes! I hear many start ups cry that they are constrained by the funding issues. But that need not be a limitation - you got to take the risk if you intend to really stay ahead of what is going to come). This could mean finding partner for the company in these advanced nations who could potentially make the product that is user ready!
b. You could lead the change in the local market once you have a good base established - thanks to the difference in the exchange rates between the developed and developing nations. This could give you a head start and resources that help obtain a leadership position in the local market.
 

One could often be blinded that, what worked in the developed countries could be easily applicable for the home market of the entrepreneur in a developing nation. Often, this assumption is way off mark - and being open to customization for the local market at that stage would be essential.
Suggestion 2: Customers as co-producers

Product development in most startups follows the vision of the entrepreneur, and if this doesn’t get aligned with to the realities of the commercial world - the focus could easily shift from having a useful product to just developing a product none could use for years.

Involving the customer early is definitely a key to being able to break this potential trap and anchor the product development with the active involvement by the customer - almost like a co-producer! (At least some end user inputs would be available and thus provide some of the feedback necessary to develop the product further).
 

The caveat in here is to realize when you are being completely held hostage to a single client. The startup would do well to being engaging with more clients of similar appetite and need once the product has reached a presentable stage.
 

Suggestion 3: Create a good lead pipeline
Quantify your customer goals in numeric terms. Goal setting plays a major part in actively pushing the teams towards listening and inculcating the actionable feedback into the development of the enterprise. 

Creating a good pipeline that helps you reach the target set for the firm is a crucial for the survival of the firm. The dispersion in the kind of customers too plays an important role - else the experimentation that forms and important role in the early stages to find the apt customer segment and the value offering to the segment could be way off target and potentially lead to the demise of the firm. 

The mix of leads in the pipeline in some ways should also be reflective of the product - features that you intend to test and validate. Focusing on the most active customer segment, and building a predictable cycle for the segment with good processes and delivery timeliness is the second major milestone after the first mentioned earlier in the blog.
Last but not the least - always be open to change. At the beginning of this blog, we began by saying entrepreneurs need not be reactive always, they could possibly seek a clear advantage if they are proactive in their pursuit of opportunities - It is always possible that in spite of the efforts one would need to change the plans and get back to what could help survive. 

Remember: The warrior who survives the day's war - lives to fight another day!