Minimum Resource Constraint – the Anti-Dilemma

It’s one of those things that you keep thinking about “how much to raise”. Having sat with my cousins (I sit on their board at again this week I realised that we often look at how much to raise in the wrong way. In the last few years, a recurrent piece of advice I was told was “raise as much as you can when the opportunity presents itself”. Whilst it seemed rational, it is actually the anti-thesis of what young startups should do IMHO.

Our own example showcased this – I for one believe we raised too much money and actually thinking back to the earlier days the difference in what we produced when we had $100k or $500k or $2m in the bank never moved the needle by the proportionate quantum; in fact not even close. Having spent time in the last couple of months thinking over this and having read Eric’s “the Lean Startup” I think the biggest mistake any startup can make especially first time entrepreneurs; is take too much capital. Inadvertently you lose focus…

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I have a simple example – you have three things you can do; each thing will cost you $1 to do. If you only have $11 you will be so much more focused and you will only have ONE priority. Now imagine you have $3; what will you do – 3 x the one thing? Probably not… you will actually split your focus / attention and rationalise it buy saying that you NEED to do this.

Also – the less you need to raise the less you focus on building a business for VCs and you spend more time building a business and solving real problems; intrinsically this will attract investors!


Hence the title

A lot of us have been told about resource as a “negative” constraint but I think it’s worth looking at Resource Constraint as an Anti-Dilemma (its a good dilemma!) of sorts – (obviously you need some resources). The less you have; the more frugal you are and the more focused you are as your survival depends on that one decision. The more you have the more you are likely to “diversify” and “branch out”; you end up juggling a lot more and actually reducing the “importance” of testing one thing at a time.

Everything being about a young company is about being lean…

What does a CEO do and tianjin?!

Whilst thinking about planning my packing to the lovely city of Tianjin for this years World Economic Forum Summer Davos session I got an email from my little cousin with a link that actually one of our board had also sent me some days back.

So without repeating what I read – I wanted to link to the article as I think it is very insightful…

The important here is to note a few really important elements in the CEO hat:

1. In the beginning the CEO does everything – sweep the floor to decide billion dollar vision.

2. At a certain points he/she build a team and starts to flow the creative juices – he/she is in the team.

3. At a certain point, arguable, he or she is partly in the team and partly out of it… in some cases the bond with the COO grows but distinctly the job at the top becomes lonely.

4. They have to usher brilliance and encourage people to take chances yet shepherd the company to steer properly; this is sometimes contradictory.

5. They have to be able to live and breathe uncertainty externally and yet breathe calm/peace when they look into the eyes of those in their company…

6. They need to excite, inspire and push forward… and ideally create a chain reaction so everyone else does.

7. They need to focus on long term and short terms – stitching what sometimes look as different chapters from a different book into a single book!

8. They at times need to make unpopular decisions and things that align with the vision.

9. They need to smile a lot and be able to communicate culture, vision but also failure with the same passion and gusto…


More on Tianjin in the next post – am about to leave this coffee shop! Oh the perils of running around in monsoon season in India!

Is hiring obsolete?!

I read this and think it is great… here is a snippet with a link to Paul’s site.

Hiring is Obsolete

May 2005

(This essay is derived from a talk at the Berkeley CSUA.)

The three big powers on the Internet now are Yahoo, Google, and Microsoft. Average age of their founders: 24. So it is pretty well established now that grad students can start successful companies. And if grad students can do it, why not undergrads?

Like everything else in technology, the cost of starting a startup has decreased dramatically. Now it’s so low that it has disappeared into the noise. The main cost of starting a Web-based startup is food and rent. Which means it doesn’t cost much more to start a company than to be a total slacker. You can probably start a startup on ten thousand dollars of seed funding, if you’re prepared to live on ramen.

The less it costs to start a company, the less you need the permission of investors to do it. So a lot of people will be able to start companies now who never could have before.

The most interesting subset may be those in their early twenties. I’m not so excited about founders who have everything investors want except intelligence, or everything except energy. The most promising group to be liberated by the new, lower threshold are those who have everything investors want except experience.