Serial entrepreneur and investor Venky Harinarayan offered some valuable advice to budding entrepreneurs on starting a venture and looking for investors at the annual TiE Conference in Silicon Valley on May 18. "The great thing about being in Silicon Valley is that it humbles you very quickly and you know that while you might think you are on a rocket ship, the other guys are on a spaceship going much faster," said Harinarayan, Co-founder of Cambrian Ventures, an early-stage venture capital fund.
"I always believe that if you are an entrepreneur, everyday is sort of a 'but' and the great thing about doing it twice, is that you realize that just because you did it once, no one gives you anything when you start again the second time," he told about 1,000 young and veteran entrepreneurs, corporate executives and venture capitalists, among others at Santa Clara Convention Center. "You start from a scratch and work your way. I think it's a little harder the second time. On resume, it reads great, but it was a struggle every day."
The TiE conference is the world's largest professional and networking event for entrepreneurs. It is organised by The Indus Entrepreneurs (TiE), a premier networking group founded in 1992 in Silicon Valley by a group of successful entrepreneurs, corporate executives and senior professionals. Harinarayan previously founded Kosmix, which was acquired by Wal-Mart Stores in 2011, and Junglee Corp, which was taken over by online retailer Amazon in 1998.
"Being an entrepreneur fundamentally means that you believe that three years from now, the world is going to be very different than what it is today. If the world would be the same three years from now or in the future, then, you don't have much of a job as an entrepreneur," he said. "Just projecting out three years about a phenomenal growth trend is one way to think of a company and you will meet the market in two years where the market is going to be. The second way is to effect the change yourself. You believe that there is some need that is fundamentally important and in that you don't meet the market, but change the market," he said, adding that he had seen both the approaches work.
Harinarayan said it's easier to start a business along with a co-founder. "You can definitely do things without a co-founder. It's not impossible but increases the degree of difficulty because you take everything on yourself especially when things go south. It's great to have someone to share the stress," he said. Harinarayan founded Kosmix with one partner, Anand Rajaraman, and Junglee with four others. "Five is probably too high. Two is potentially the right number. But beyond the number, it is the chemistry that you have with your co-founding team. Trust is the most important thing," he said. He added that the biggest reason why start-ups fail is founders not getting along.
Harinarayan said the most important thing for first-time entrepreneurs is to find the right investor at the right stage of the business. "If you are trying to raise less than a million dollars to get off the ground, then do not go to a top gear venture firm. It would hurt you down the road," he cautioned.
He emphasized the need to win customers first before focusing on revenue growth and profit. "If you focus on profits, you will do everything wrong. You start with customer wins and then move on to revenue growth and only focus on profits when you have gone public."
Speaking about his experience as an entrepreneur and an investor, Harinarayan said, "I have typically seen successful start-ups get an offer for exits two years into existence. If you decide not to take it, then you are signing up for another three to five years. It's about building the business. It's not about technology or vision any more. If you have been a part of a positive acquisition, there is a jolt of energy that comes in with the acquisition. People are excited and energized. There's a period of irrational exuberance in the first six months, followed by a period of irrational doom for the next six. Carve out some significant wins in the first six months."
So, what does it take to be a successful entrepreneur? "There is a playbook for not losing, but not for winning. You can do smart things, so that you don't lose. Winning is a lot of luck and being in the right place at the right time," Harinarayan concluded to a thunderous applause.