How should young MBAs approach their entrepreneurial dreams? Get some real-world experience to begin with, says Alok Mittal.
The road to entrepreneurship is paved with wisdom and single-minded hard work. To start with, there is no such thing as an “experimental entrepreneur”. The desire to be an entrepreneur is not independent of the entrepreneurial idea, nor is the idea independent of your wholehearted effort.From a purely analytical capability standpoint, based on the people I have met over the years, I have found that young MBAs are just as good as the older people. However, freshers sometime lack real-world experience, which is crucial for success. But with more and more students with work experience joining B-schools, this issue should be alleviated.
You can’t force anybody to be an entrepreneur; some people are content with their jobs and the fact that they get salaries. The drive to be an entrepreneur has to come from the people themselves. So, it is vital for any young entrepreneur to have the right people to tap into relevant work experience and industry connections. Therefore, finding people who believe equally in the idea at the very start is critical.
However, one approach that many venture firms take with younger entrepreneurs is that they ask them to get a few experienced hands on board. We also give them advice based on our experience. At the end of the day, what usually kills many a start-up is not the idea. In several cases, the ideas were not very different between a successful start-up and a failed one; the only thing that was different was the quality of execution, and this is where experience fits in.
And so the most important point about a start-up is: no matter how great the idea, and no matter how much money you can raise, it is the quality of execution that can make or break you. Entrepreneurship goes beyond the idea, and that is why I keep highlighting the importance of experience.
Younger entrepreneurs face the same problems as the older ones, except that they lack the experience of the latter. In fact, the main problem is the same for both: most people hold on to an idea for too long despite changing scenarios. They take too long to adapt to change, and, I believe, this is where venture companies can really help such start-ups. This is because we understand that people become extremely attached to their ideas and refuse to change. But successful entrepreneurs know when to persist with an idea and when to change.
As for ideas, a lot of these today are around the Internet and technology and quite obviously so. I do not think that adapting an idea from another market is a bad thing for young entrepreneurs. There is a considerable opportunity in “concept arbitrage”, which means adapting a concept from another market to fit the needs of the domestic market.
However, entrepreneurs should always try and find a new space, and also think of scalability. There are two aspects that entrepreneurs should think about when deciding whether to raise money or not. The first one is a plan of how the money will be deployed to enhance the business; that is to show that the business can grow faster with the fresh funds than without.
The second is a “proof of concept”. This can be different for different types of capital. For an angel investor, it could just be the team, and for a mid-stage investor it could be the success of the first few pilots. But remember, at the end of the day, entrepreneurship is not just about an idea. It is about building a viable business around that idea.
(Alok Mittal, who spoke to BT’s Kushan Mitra for this advisory, is Managing Director of Canaan Partners India, a venture capital firm that invests in Internet, business outsourcing and technology companies. Mittal is a co-founder of Jobsahead.com, a jobs portal that he sold to Monster.com in 2004, and mentors young entrepreneurs in his spare time.)