Posts Tagged ‘advice’

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Confessions of a Tech Entrepreneur

This is a cross post from Sami Shalabi’s blog

Taking on entrepreneurship is one of the most life changing events any person can embark on; it not only impacts the individual, but impacts the community and even the world. An entrepreneur is someone who just does not accept the status quo, but has a vision for the future and makes the impossible happen to arrive at this vision.

Entrepreneurship is not easy anywhere in the world. Each region has its unique challenges, and in the same ways has its unique opportunities. The Middle East and North Africa (MENA) is in transition. All market indicators whether it is around consumer usage patterns, infrastructure availability, business demand or overall business and political disruptions indicate the MENA is ripe with opportunity. Things are moving quickly and it is clear that it is a major and growing world market.

What does this growth mean for MENA entrepreneurs? We are about to enter the age of MENA entrepreneurship. MENA Entrepreneurs are going to be the life blood of all MENA economies. If you have what it takes, now is the time to act and take that idea you have always wanted to do and just make it happen. Only good will follow!

In my journey as an entrepreneur, I too started with a desire and an idea. This idea took me to unexpected places and taught me plenty of lifelong lessons that I will share with you in a list of 10 confessions:

1. Be your #1 customer

I have always found that the greatest products service the needs of those that create them. Solving a real personal pain point makes you passionate about the space, and solution. Being your #1 customer makes you use your own product everyday and forces you to keep improving it before the rest of the world asks you to. Your problems are potentially business opportunities.

2. Beauty though real things, not business plans

I always tell entrepreneurs when starting out not to focus too much on the business plan. That is a poor use of time. Spend your time building a prototype and make it look beautiful. Many early stage detailed business plans I have seen are not worth the paper they are written on. A beautiful user experience that solves a real problem get most users and investors excited. It also proves that the team behind the idea can actually deliver, which is usually the biggest wild card with early stage entrepreneurs. So ask yourself, would you invest in a business plan or a real working service that looks great?

3. People like to do business with people they like

One of the best pieces of advice I got when I was starting out was to not be so serious or take myself seriously. When working with customers, investors, and partners, it shouldn’t all be about business or technology. Human nature gets people to gravitate towards people they like. I have seen it time and time again, and all over the world, people like to do business with people they like, plain and simple. Do not forget that. There is no harm exposing your cool personality during these important business meetings and presentations.

4. Fail fast

Failure in the MENA is a huge taboo, sometimes the kiss of the death. If you read the research, second time failed entrepreneurs double their chances for success. At a more tactical level, I have found that it is far more important to get to a working prototype as fast as possible, so you can identify what is not working and fix it. In most of the products I have worked on, the first prototypes validated that the initial ideas needed evolution to work for the market. This is especially the case with new products, new markets, or new ideas. Ideas need time to bake, and it is best to bake them by allowing the bad ideas to fail as quickly as possible so the good ones fourish. So, don’t be afraid to have failed ideas under your belt, just make sure you do it quickly. In fact, the more bad ideas you have under your belt, the closer you are to having a good solution.

5. Build a lean mean machine

One common mistake I have seen in many startups is scaling and hiring a lot of people quickly. I think that it is a bad idea when you do not know that you have a product market fit. The less money you spend at the beginning, the longer your runway to figure out if you have a business. Start to scale only once you see traction, otherwise it is a poor use of money. Find the cheapest path, time and money, to test the solution.

6. Put everyone, including yourself on a vesting schedule

One of the most challenging problems with most startups is figuring out who owns what. I have a simple rule, all employees and founders must be on a vesting schedule from the start. Vesting is when people get their equity in increments over an allocated period of time. For example, if you own 40% and are on a 4 year vesting schedule, you get 10% every year for 4 years. If you leave early, then you get what is vested. There are many schools of thought, but I generally like to pick a vesting schedule of 4 to 5 years. This is such a critical concept because it protects everyone. If anyone wants to part ways early on, then it does not destroy the business. Further, it also tests if everyone has the resolve to stick with the business. A business is a multi-year affair and those that stick with it should be rewarded more than those who do not. This topic has a lot of other subtleties that I will not go into, but the principal should be set forth from the start.

7. Great teams rule

When starting a business it is important to find people to work with you that complement you. It also allows you to scale as a person and creates an environment of healthy dialog. The most important advice I got in the start of my career was when I figured out how to get others to help me. I have a better chance of moving faster and having broader impact. Further, innovation is a process and not an event. Working with others helps put that process into hyper drive. When picking people, make sure they are rock stars at what they do. The first group of people you work with will define your corporate culture and be role models for everyone else. Never compromise on people because one bad apple will bring the whole team down.

8. Plan in small measurable increments

I am a strong believer that attacking problems should be done in small increments. It makes things manageable and achievable. I generally like to set my goals once per quarter and then every week set a weekly plan to support my quarterly goals. Especially in technology, planning beyond a couple of quarters is the equivalent of looking in a crystal ball. This does not mean that there shouldn’t be a strategy; a strategy is a direction, not an execution plan. Execution should be focused on measurable deliverables. If you do not measure what you do, then how do you know when you are done or if you have succeeded.

9. Always get out of your comfort zone

I have a personal rule, if I am in my comfort zone I am doing something wrong. When you are in your comfort zone, then you are not learning. Getting out of your comfort zone, means you are learning new skills to close a gap. I ask myself always, am I doing something new? If the answer is no, then I need to change things so I am uncomfortable again.

10. When starting out, sell to anything that moves

A common thing I hear from many entrepreneurs, especially in the MENA, is their fear to share their ideas with others. The logic just shocks me. First, if an idea can be easily copied by just a conversation then it is an indefensible idea. Second, actually executing on an idea is really hard work. The likelihood of someone doing this is very low. On the plus side, when you share your ideas with others, then questions they will ask you will help it grow and flourish. The more people who talk about what you are doing the more you are likely to get visibility in the community and industry.

In closing, entrepreneurship is the most exciting thing I have ever done. It has helped me grow as a person because of the things I had to do and all the great people I met in the process. I am sure you will too. The hardest part is always taking that first step, so what are you waiting for?

About Sami Shalabi

Sami Shalabi is a Boston based software inventor, entrepreneur, and angel investor. He is currently Head of Engineer for Digital Publishing Platforms at Google. At Google he also co-founded Google Friend Connect. Sami joined Google after they acquired Zingku, Inc, a venture backed software company he co-founded in 2006. Sami has over 30 patent/patent pending ideas and MIT recognized Sami with the 2009 MIT Young Professional Award.

Sami also co-founded a non-profit called YallaStartup, an organization with the mission of fostering innovation and early stage entrepreneurship in the MENA region.

Prior to Zingku, Sami had architecture and leadership responsibilities for a number of products at Lotus, Iris Associates, and IBM. Sami serves on the Board of the MIT Arab Alumni/ae Association as well as several startups and non-profits. Sami received his SB and MEng from MIT.

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Posted on November 2nd, 2011 by Sami Shalabi in Articles, Tips, YallaStartup | No Comments »
Raising venture capital

The VC answers; Raising Venture Capital: Advice for MENA Entrepreneurs

This is part of an ongoing series of expert articles about entrepreneurship. It answers the questions you have asked on YallaStartup answers. If you would like to contribute to this series, contact us at exec@yallastartup.org with your proposal.


Hello YallaStartup members,

Thank you for your questions! The answers below are just starting points and I hope we can follow up on these subjects on an ongoing basis on YallaStartup’s Q&A platform.

Let me start with a few basic but important points about what are the objectives of a venture capital investor, from their own perspective:

  • Venture capital investors manage other people’s money. Often, the funds come from very large institutions such as pension funds, who need to diversify their risk over different asset classes, one of which is the venture capital asset class
  • VCs are accountable to their own investors, called Limited Partners. Their performance is clearly measurable and determined by how much money they return to their limited partners
  • Typically, there are only two ways to return money to investors: either a portfolio company “goes public”, or it gets acquired by another company. These “liquidity events” are the end goal towards which VC investors need to work from the very beginning, including your first pitch!

So the overall principle is not too complex: entrepreneurs pitch an investment opportunity which, if all goes according to plan, should lead to an IPO or an acquisition in a few years, allowing the VC to provide their limited partners with good returns on their investment in the VC fund.

Therefore, the general answer to most questions about VC pitches is the following: anything that helps an entrepreneur build a more convincing case is good. This means that, all else equal, it is better to have a detailed plan, a strong team, a working prototype, early customers and a good cash flow! Not only does it increase the likelihood of investment, but also the valuation you can get at the time of an investment. At the seed stage, and early angel stages, the expectations to provide all of the above will of course be lower.

So having said that, the answer to Khaled’s question regarding what to present to a VC is “it depends”, but I would definitely try to have a demo if possible. A demo avoids the need to provide an abstract explanation of what you intend to do. If a picture is worth a thousand words, a demo is worth a thousand PowerPoint slides. A demo also shows that you have the technical ability to build something, and enough commitment to your business idea to have devoted some resources (time, effort, money) to it.

Regarding having a detailed business plan prepared, just keep in mind that you are asking for funds, and therefore you need to show that they will be used efficiently. What will the operating costs be? Who will you hire? What can you achieve if we give you $xx, and how will that help you raise the next $yy in one or two years? The more clarity you can provide around these points the better. But we all know you will not have all the answers at first, so no need to go into excessive details. We just need to know you have thought the issues and are proposing the best solution, given the information you have today.

This brings me to Bana’s question regarding the most common mistakes I see as a VC. I wrote a blog post a while back entitled “Comparing first-time and serial entrepreneurs” (http://ziadsultan.com/?p=36) that covers this question. The five main things I had identified were the need for new entrepreneurs to: define the problem better, assess the cost of customer acquisition better, understand the customer’s budget, be more realistic about partnerships, and get feedback early and continuously.

Finally, I would like to address the questions regarding the MENA region. I have personal ties with MENA, but my work so far has focused on the US. Given this disclaimer, here is my take on some of the challenges:

  • The MENA is still an emerging market for tech ventures, which means there is a small market for tech IPOs and M&As. This makes it a little harder to have a lot of VC money flowing into the region. Yahoo’s acquisition of Maktoob was a good start, but we have a long way to go. http://www.techcrunch.com/2009/08/25/confirmed-yahoo-acquires-arab-internet-portal-maktoob/
  • While there is a lot of tech talent available in the region, and a culture of entrepreneurship in general, there still isn’t a robust ecosystem of tech entrepreneurship. Very few places have such ecosystems, Silicon Valley and Boston being two of the rare examples. This video does a good job of describing the components of such an environment:http://vimeo.com/7537191

Having said that, I firmly believe that the MENA region has all it needs to produce successful technology companies in the coming years. A few ways to do so would be to:

  • Find local solutions to create the next winners on the Arab web. No one knows this market better than local entrepreneurs, so you have a strong advantage that you can exploit. Innovate better and faster on your home turf. The MENA market is bigger than you think and getting bigger!
  • Don’t be afraid to go after global markets. In today’s world, a virtual, agile team based anywhere has a fighting chance! So if you come up with a solution that could be global, don’t be afraid to give it your best shot
  • Create a well connected entrepreneurial ecosystem. They say it takes a village to raise a child. Well, it takes a sophisticated entrepreneurial environment to create successful tech companies. Developers, designers, investors, mentors, lawyers, and many more functions should collaborate and constantly exchange ideas and share the lessons learned.

This last point is particularly important and I am glad to see initiatives like YallaStartup gaining momentum because they can serve as a great catalyst for new companies. Participate in the Q&A forum, organize and attend events or webinars, discuss your ideas with the entrepreneurial community, etc.

I will try to do my part by answering questions on YallaStartup. So if you have more questions for me, please post them on YallaStartup and ping me on twitter at @zsultan. I’ll do my best to help out!

About the Author:

Ziad focuses on investments in business applications and consumer media. His responsibilities span all aspects of Longworth’s investment process from deal sourcing and due diligence, to deal execution and ongoing support of portfolio companies.

He earned his undergraduate and master’s degrees in electrical engineering and computer science from the Massachusetts Institute of Technology, where his graduate studies focused on artificial intelligence and digital signal processing.

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Posted on February 8th, 2010 by Guest Author in Articles, Guest Author, Tips, ask-the-expert | 7 Comments »
ziad

“Ask the expert”; Don’t miss your chance to get your questions answered by a VC

We will be hosting a series of open sessions with industry experts where you will have the chance to ask questions directly to them. The top 3 to 5 questions/topics will be answered in a blog post. We hope to repeat this enough times to get all your questions answered.

We’ll start our first “Ask the expert” series with a venture capitalist. We are fortunate to have Ziad Sultan from Longworth Venture partners join us to kick things off. join us to kick things off. You ask questions and we’ll  pick the top 3-5 topics. Ziad will answer each of them in a blog post and on the Q&A site. Question collection will start today and will be open for one week.

Here is how you can ask your questions:

  • Register on our Q&A platform if you haven’t do so already. It is important that you register so you can vote questions up or down
  • Add your question to the “answer” section here. (Do not create a new question in the Q&A platform, instead add as an “answer”)
  • Rate up or down other questions
  • Share the Question link on Twitter and/or Facebook
We will close the questions down in exactly one week so be sure to have your questions in asap. Oh, and don’t be afraid to ask tough questions :)

Ziad Sultan

Ziad focuses on investments in business applications and consumer media. His responsibilities span all aspects of Longworth’s investment process from deal sourcing and due diligence, to deal execution and ongoing support of portfolio companies.

Ziad joined Longworth from the Boston Consulting Group where he advised clients on a wide range of strategic and operational issues. Prior to BCG, Ziad worked as a consultant with Ernst & Young where he helped launch a new advisory practice focused on IT strategy and governance.

He earned his undergraduate and master’s degrees in electrical engineering and computer science from the Massachusetts Institute of Technology, where his graduate studies focused on artificial intelligence and digital signal processing.

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Posted on January 19th, 2010 by Habib in YallaStartup | No Comments »