Amit Paranjape’s Blog

What current startups & tech companies can learn from the Dotcom Era

Posted in Information Technology, Science & Technology by Amit Paranjape on March 30, 2009

Feels like an eternity since the 2000 Dotcom Era! Especially given that everyone’s now talking about the present global financial crisis.

 

We all have short memories, and the present crisis often times leads us to forget other crises from the past. And yet, I still see many tech companies and startups (especially here in India) repeat those same mistakes from 1999-2000, a decade later. There are many people who have talked about this topic, and I still feel that some points are not being adequately covered.

 

As someone who lived through this entire crazy era, I wanted to add my views on this. Here are 21 lessons that I would like to highlight. 

 

1. ‘Dreaming & Envisioning’ = Good. ‘Day Dreaming’ = Not Good.

 

2. Revenues and operating profits are extremely important! Be conservative in ways in which you invest cash.

 

3. Control costs at all levels. If your office starts resembling a kitchen pantry or a stationery supply room, then there’s something wrong!

 

4. Travel – only when you absolutely have to! There are enough technology enablers to reduce travel substantially. Leverage them to their fullest.

 

5. Do not think about ‘VC Funding’ or even ‘Angel Funding’ from day-1. On the same note, don’t focus on valuations, unless and until you are actually raising external funding!

 

6. While it’s important for a startup to be ‘passionate’ about their business, their idea – make sure that this ‘passion’ is pointed in the right direction. ‘Passion without direction’ can be more dangerous than a slow steady calculated approach.

 

7. Remember, not every crazy idea that a new startup thinks of, is genuinely novel and path-breaking. Chances are high that many of these so called ‘master-strokes’ are ideas that were rejected by more mature companies after an objective analysis.

  

8. Advertising alone is not a sufficient revenue channel for internet based business models.

 

9. You should be able to explain your idea in clear and simple terms; without using any ‘buzz words’.

 

10. Pure-play B2C Services online models seldom succeed. Often times, a strong offline component is also essential.

 

11. Software quality is very important – scalability, reliability, and end-user experience are extremely crucial metrics.

 

12. Focus on your core domain – don’t chase each and every hot new opportunity area.

 

13. Remember, technology is simply a means to an end, and not and end by itself. Focus on the problem to be solved, and not the ‘cool technology’! 

 

14. B2B models cannot rule and control the value-chain! They are merely facilitators.

 

15. B2B models offering ‘SaaS’ services should focus on the business value of that service, and not simply ‘fancy software and deployment architectures’.

 

16. Don’t overdo perks such as freebies, parties, gimmicks, etc in order to ‘motivate’ and ‘retain’ employees. Ultimately, more mundane things like the founder’s vision and personal leadership skills are more important. Cash and stock ownership are important as well!

 

17. Take the ‘experts and analysts predictions’ of new and emerging technology and market areas with a pinch of salt. Do your own research.

 

18. Do not listen to those media experts who proclaim- ‘This time, its different!’ It usually isn’t. The fundamental laws of business (like the fundamental laws of science) don’t change!

 

19. Unless you are sitting on some path-breaking algorithm or something like that, don’t be over-secretive about your idea. Remember, it’s your execution that is going to count more than your idea. Being over-secretive is counter-productive from the point of view of getting good upfront validation and feedback.

 

20. Remember, sales & delivery go hand-in-hand. Ignoring one side, while excelling at the other one doesn’t help you succeed.

 

21. First, validate your new breakthrough ideas with your existing customers – before going to the market. 

 

3 Responses

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  1. Karl Waldman said, on March 30, 2009 at 1:25 am

    Amit,

    You obviously remember when i2 caught that killer wave — the only thing I would add is that cash flow is key. Any startup should know about when cash comes in and when it leaves and that big companies like to pay on 45 days but employees want to get paid weekly or bi-weekly.

    Karl

  2. Jaideep Deodhar said, on March 30, 2009 at 11:49 am

    Hi Amit,

    Agree with all the points, and Karl’s comment. If I can sum up my lessons:
    1. Cash is king. Beware of seemingly “temporary” cash flow problems.
    2. Execution is the key (or shall we say the queen)
    Nothing new here. This has worked for the last 10000 years. Don’t see how it can change now.

  3. Alolita Sharma said, on March 30, 2009 at 3:44 pm

    Amit,

    I like your points – practical and realistic. I’d like to add to your point #19 and re-emphasize that open discussion about ideas and what you’re building is very useful in flushing out flaws and tuning one’s execution model. Most people are not interested in stealing someone’s idea since its most likely that it has been implemented already.


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