Aditya Kothadiya’s Blog

I recently observed some cultural difference between a self-bootstrapped, profitable, and growing Web startup vs general VC funded Web startups about how they spend money. I thought it's a great tip for all budding entrepreneurs about how to set the culture in the company.

My wife recently joined a web startup, which is a self-bootstrapped and highly profitable, and which is also growing very crazily. It's still a young startup with small engineering team. When she joined, she expected that they will give her a laptop. But they didn't give it immediately. They first asked her and made sure that she needs a laptop and just a desktop is not enough. Once they agreed on giving her a laptop, they neither ordered a MacBook Pro nor an IBM ThinkPad. They ordered a Dell Lattitude laptop.

They kind of hinted her as well that they are spending money wisely. And in fact, almost everyone in her company have similar laptops. Fortunately, my wife wasn't that disappointed about it. Of course, she would have loved it if she would have gotten some cool laptop. But rather she appreciated their culture and thought process about spending money wisely.

On the other hand, we have these Web2.0 startups without any business model, who are surviving only on VC funding. I have seen a common trend in Job advertisements of these startups. One of the benefits they mention is – you will be provided with a cool 4GB MacBook Pro with 2/3 22” Monitors and so on.

Of course, it's a great perk for a potential employee, but I don't understand what founders of such startups think about money in their bank while throwing away on such luxurious things. In general, they can save $1000-$1300 per employee if they stick with Dell laptops when they are in early stages and still get things done. When they are not earning anything, and burning someone else's money, how can they spend crazily on such luxurious things?

You might also argue that if employees are happy with a MacBook Pro, then it might improve their productivity and is actually beneficial for the company. There might be some truth in it as well.

But then I wonder why these self-bootstrapped and profitable startups don't think that way? Why don't they think that spending more money on employees' luxurious needs will improve their efficiency?

I think it's because it's their own money, so they feel what it takes to earn that much money before they spend it. On the other hand, probably these VC funded startups don't realize what exactly earning money is.

I might be wrong on this whole aspect. This is just my external observation about how two different companies think about spending money. It will be interesting to know the thoughts from startup founders who are dealing with this situation. What they think about this aspect and what culture they follow? If you have any opinions, then please do share in the comment section.

Some more one liner thoughts – straight from my Twitter account –

If you enjoy reading my thoughts, then you can also follow me on Twitter here – http://twitter.com/adityakothadiya to receive real time thoughts.

Every budding entrepreneur must watch this video by Gary Vaynerchuk.

Watch it, understand it, and practice it – day in day out! It's a very powerful advice!

[Photo credit: bootload]

Few days ago, I was having some interesting conversation with my friend about two most important aspects of a startup – the idea and the team.

I shared few opinions of mine with him that I learned during my tiny attempts of starting a startup. Here I'm sharing those again with you -

Innovating Ideas for a Startup is not Easy

They say that there is no shortage of ideas to start a startup. I think it's a misleading statement. Yes, I agree that there seems to be tons of ideas – but those ideas are like – fix some broken thing in an existing idea, or improve some aspect of an existing idea, or simply self-generate some fancy ideas. There might not be shortage of such ideas. But can we really build a profitable business or a viable company based on such ideas? I think it's better to call such ideas as side-projects rather than startups or companies.

That's why I think that there is a shortage of ideas – ideas which are truly innovative, which are truly business oriented, or which has potential to build a viable company. Very few people come up with such innovative ideas, and I feel envy of them.

I'm personally facing this issue and observing similar trends in this Web2.0 world as well. I met a guy in Startup School few months ago, and he discussed his idea with me. He said he owns a domain name, which I think was really crappy, and he was trying to cook a crappy idea around that domain name. On top of that, he said he is a business development guy and looking for a hacker to work on that idea to start a startup. This is so pathetically wrong!

Ideas are not generated like this. I don't think we can build business like this. They are good ideas for side-projects. I've done such mistakes. But I think that's a wrong approach.

I think it's very important to do thorough brainstorming sessions with like minded people when we want to cook an idea for a startup. Such team should discuss as many critical problems that they are facing as possible. They should come up with as many innovative and compelling solutions as possible for each problem. They should discuss in detail how big is the market opportunity for each solution; what are the potential business models for each solution, etc.

And then pick the most promising idea that all the members from team think is the next big idea for starting a business. And then start working on it. This can be a time-consuming and lengthy process. But we can't just come up with an idea to build a viable business in overnight, can we?

This idea generation approach doesn't guarantee that it will be a successful business. I think it's reasonable if ideas generated through this approach fail. There are numerous factors why startups fail. But I think this approach at least increases the probability of having all team members passionate about a particular idea, and hence the probability of success.

First Team, Then Idea

The above approach brings up an interesting question – to have a team first and then decide the idea Vs to have a idea first and then build the team.

I personally think the best approach is – to have a team first, and then brainstorm on numbers of ideas, and then pick the most promising one.

What's wrong with the “First Idea, Then Team” approach?

I think if we come up with an idea first and then try to convince other entrepreneurial people to join us as a co-founder, then it's really hard to get him on the board, mainly for 2 reasons -

1. He feels that he is joining us and not starting with us. He doesn't see the sense of achievement or ownership in this business. It's a human psychology, stupid though.
2. Since he is also of entrepreneurial traits, it's very likely that he will also have his own idea that he wants to start. So he might not find our idea better than his because he has lots of prejudiced thoughts about his idea. And it's not easy to erase those prejudiced thoughts. So it becomes harder in this situation as well.

I'm personally facing this issue, and seeing it's very hard to bring someone on the team. I'm also seeing the issue from other side of the table, where I'm having an option of joining someone else's team while I'm working on my own idea.

What's right with the “First Team, Then Idea” approach?

When we are first building a team, and then deciding the idea, then things becomes way promising. Since we all are brainstorming on lots of different ideas and are criticizing each other ideas, the session results into awesome ideas and compelling solutions that we as a individual couldn't have thought about. Then coming up with the most promising idea, and working together on it makes it very likely that everybody in the team will have equal passion for that idea and will put their best to make it successful. This can be very critical aspect while building a viable business.

What do you think? What experiences you had when you started alone vs you started with a team? Which approach do you think is better? Share your thoughts in the comment section below.

Related articles from this blog:
The Foresee (Four ‘C’) Theory!
Are You In Rush To Start A Startup?