Prof. Muhammad Yunus: The Power of the Simple & The Logic of a Social Business

I had interviewed a well-known Venture Capitalist who argued that all good businesses are social businesses too - since they create new jobs & wealth, pay taxes, etc. Though I had tracked the debate around micro finance (the Grameen vs SKS way), I remained convinced that the split between "for profit" and "social ventures" was an artificial one. Until I came across the "Story of Khan Academy" (in which founder Salman Khan makes it clear that there is no revenue model to the venture and it relies on grants from folks like Bill Gates and others).Now, via his recent talk at the LSE, I learnt from the original "Social Businessman" - Prof. Muhammad Yunus - the fundamentals of his Simple but undeniably Powerful approach. By the way, he does not like depending on grants (since such ventures are not "self sustaining") and insists on creating a "businesses" (which covers costs) but just not something that shareholders take money out from).

Some amazing vignettes from the speech:

• How he told unemployed Bangladeshi youth that they were "privileged folks"! That they need to be job creators not job seekers.
• The importance of creativity and imagination: Like Science Fiction precedes Science, we need "social fiction" to precede society. Example: Think of a world when there is no Poverty and you need to visit a "Poverty Museum" to understand what it was about (like we do for Dinosaurs)!
• Unemployment is artificial: "Have you ever seen an unemployed animal? If you have, it's most probably owned by a Human!"
• His views on why Poverty and Unemployment are not created by People, but Systems (institutions, policies, etc) that are wrongly designed. "Look at the banks! Even 2/3rds of the world's population does not have access to banking system. Credit is only for the privileged")
• "If you introduce me as a 'A Banker to the Poor', when someone from a large Bank comes over, would the legitimate way to introduce him not be 'A Banker to the Rich?' If he's just a Banker - and not a Banker to the Rich - then I just look like a funny guy who lends to poor people! But, actually he's the funny guy - who lends money to people who already have lots of it!!"
• "Law creates the mould and the mould creates the shape." We need a new law that governs banking for the poor (in each country) to shape the kind of institutions we need.. That will legitimize our business  - like in Bangladesh where the law allows us to accept deposits and therefore, we do not have to kowtow to the diktats of any external investors.
• Grameen's Social Business partnerships with MNCs like Danone, Veolia and Adidas
• His response to journalists who asked him: "Isn't Danone using you?": "Oh God!, I didn't know that. I thought I was using them."
• Microlending in New York (at 15% declining interest rates)
• His Social Fund in Haiti and solution to the garment industry tragedy in Bangladesh 

The Audio (podcast) version can be downloaded from here

 

"We have more lawyers than you have employees"

Finally, a story about the advantage of being a Large Company. Take that, Clayton Christensen!

From a podcast interview with Jay Shapiro, founder of an Singapore-based online ad agency called Blue:

Jay: We were Blue Sphere Interactive and around, I guess 2001, EDS, Ross Perot's company, decided they really wanted to get into the internet...And sure enough a couple of months later EDS launched this small start-up spinoff with 2,700 employees called Blue Sphere. And they were marketing to HP, we were doing HP. So I sent them a lawyer's letter saying please cease and desist, you're causing confusion in the market. We're Blue Sphere, we had trademarked the name already and everything. And they sent us back this fantastic lawyer's letter. I still have it. It said thank you for letting us know. Please be advised we have more lawyers than you have employees. We suggest you change your name.

Andrew: Is that really what they said?

Jay: Yes. They actually put it in a letter. I cannot believe it. And so we became Blue, which is a much better name anyhow. So that's how the venture was born.

Andrew: Oh, what a great letter to send out. It's ballsy, and it's painful, and it's wrong, and it's great.

"I Like/I Wish/I Wonder Meetings" - Way for Startups to Train Away Authority Bias?

In a fascinating recent lecture at the LSE, Swiss writer and entrepreneur Rolf Dobelli (author of The Art of Thinking Clearly), talks about the various common "thinking errors" that we committ. Here are a couple of them:

Sunk Cost Fallacy 
If by mistake - in the same week - you have paid a non-refundable prices to vacation in two different cities, Paris (which is your favorite city where you are sure to enjoy yourself the most) and Rome.If you have paid $4,000 for the Rome trip and $1,000 for the Paris trip, where will you go?

Answer: Go to Paris!

"If it's non-recoverable then it should not have any bearing on our decision. It is irrational," Dobelly says. In a business context, this error causes good money to be thrown after bad. Eg: the Concorde aircraft was kept alive well even after it became clear it wasn't going to make money just because too many millions had been spent in developing it.

But avoiding this error might not be too easy in familial settings as the author himself relates: "The weather and setting at our Swiss home was beautiful and I thought I would like to just watch the sunset and relax. But my wife has bought expensive movie tickets and said we should go. I told her: "Honey, that is a thinking error". She 'loves' it when I say that."


Authority Bias
People tend to over value/follow blindly/not challenge someone who is seen as an authority. "Whenever we are in presence of an authority figure, we stop thinking clearly."  This can be dangerous for example, if a junior co-pilot, who even when he notices the Captain make a mistake, does not point it out. In 1977, 600 people died when two 747s crashed in to each other owing to such an error. As a result of this, the airline industry has "trained away" authority bias by insisting that, as part of each pre-flight briefing, the Captain will say to the co-pilot, "I'm not the Pope; I'm not infallible; I will make mistakes. If you see me make a mistake, please speak up." (Download the full podcast from here)

While the founders of the news aggregation software Pulse (that was acquired recently by LinkedIn) were not specifically referring to the dangers of authority bias, their practice of asking their employees to speak up about any concerns in their Friday all hand meetings - titled "Ask Absolutely Anything of Akshay and Ankit (AAAAA)" - seemed like a good way for startups to achieve this. "It's better to have small quakes (than a big blowup)," they put it in their Stanford e-corner interaction. The employees can bring anything in the forum as long it starts with "I Like" or "I Wish" or "I Wonder". (Download the full podcast here).

The Faith Restoring Story of Khan Academy

Speaking at the LSE on 10 April 2013, Khan Academy founder Salman Khan provides a lively, entertaining and touching account of his journey. (The story of Khan Academy's founding - how it started off as remote math tutoring sessions for his cousin Nadia, etc. - has been available on Youtube since TED 2011, but as someone who prefers audio/podcast to video, this is the first time I've got to hear Khan speak. And, in these rather depressing times, the story was indeed inspiring.). 

From the section recounting Khan Academy's earliest days - when he still had his day job:

• One parent - whose children had learning disability (and Khan's videos were the only things they were connecting to) - wrote in to Salman saying "our entire family prays for your family each night". "Just for a little context, I was a hedge fund manager at that time!" :-)
  
  
• When Ann (Ann Doerr, wife of venture capitalist John Doerr, who'd sent in Khan Academy's largest donation  - of $10,000.) asked how I was supporting myself and my family, I answered, "I'm not." She nodded, and we parted ways. About 15 minutes later, as I was parking in my driveway, I got a text message from Ann saying: You need to support yourself. I am sending a wire for $100,000.... Two months later I start getting a series of text messages from Ann (which by now, I have started to take very seriously!): At the Aspen Ideas Festival...Bill Gates on stage, last 5 minutes talking about Khan Academy." (Soon thereafter, The Gates Foundation became one of Khan Academy's largest donors.)

Download the full LSE podcast from here, and GET INSPIRED. (The least feeling you will come away after listening is that there's hope yet - thanks to  Entrepreneurs like Khan and the Silicon Valley way!) 

Most Entertaining Investor Interview Ever: Chris Sacca by Jason Calacanis

Chris Sacca of Lowercase Capital is an investor in several well known US consumer web, mobile, and wireless technology startups like Twitter, Kickstarter, Uber, etc. A lawyer by education, he earlier worked at Google.
Highlights: 

Personal story

Amazing story of how he lost millions in leveraged trading and how he clawed his way back.

"Fake it till you make it": Highly entertaining story about how, when he was out of job, he created a fake management consulting company, The Salinger Group, and handed out its card at various networking forums (including TiE). He even offered to let his friends who were also out of jobs to use the company's name!

On Entrepreneurs 

Truly Disruptive Entrepreneurs: Failure is not part of the options for them. They never doubt the outcome. They just think "the world will be a better place if this product gets built".

If I'm the one asking the entrepreneur how can this be bigger, then I worry  

Merits of working in a small company

While whoever is nearest to the door becomes the receptionist, the learning curve is so steep that very quickly, you might even be standing in for the CFO.

Working at Google

At Google, you could show up in other people's meetings - if you are being useful, no one asks why you are here.

Interesting story of how he had to buy up data center capacity across the world without alerting competitors like Microsoft - so that they don't realize how quickly Google was growing.  

On Raising a fund

It's tougher than raising money for a company since in the case of a company, the investors are betting on a combination of the person, product and market. On the other hand, in the case of a fund (especially a solo fund - i.e., being managed by one person), they are betting just on the person.  

On Investing

Managing your own psychology is 100% of investing

 Dealflow for best performing deals: Being genuinely helpful is the best way to get the best dealflow. Spend more time networking ("breaking bread") with entrepreneurs, other investors and advisors than by speaking at major events like TechCrunch, etc.

Is increasingly excited to invest in companies that are at the intersection of content and technology. "The costs are decreasing and the audience is increasing." 


Misalignment of interest between early stage and later investors

"It's all fun and games until you get to Series B (second round of funding)."

When an investor comes in at Series B, he wants a binary outcome; ie he wants the company to "go for broke".

This creates political infighting: entrepreneur verses angels versus early VC investors ve later investors

 

On Exits 

The founders of Kickstarter make all investors commit to stay invested for 20 years. "No one is looking to exit"  

On Twitter

Facebook is who you used to know; Twitter is who you want to know

UI

Simple is hard to make & hard to charge for

"It's all About the People" - The Truism that Stays True

From a Mixergy podcast interview with Dr.Rajiv Kumar of US-based corporate wellness service ShapeUp. (Emphasis mine)

What’s the one takeaway that you have? One thing that you say, hey you know, I am better because I have this one understanding after having built this business.

Rajiv: Yeah, I think it would probably sound very obvious and maybe somewhat cliché, but at the end of the day, every single thing that a business does, successes and failures, are all about people, and can’t underestimate that. I think we know it, but we forget it sometimes. But it is the people that makes everything happen or makes thing not happen. There’s a huge opportunity cost to having a wrong person in a position, and you don’t realize that opportunity cost until that person leaves, and because either there’s a void and you realize that this person was actually dragging the company down, or someone who comes in that’s much better and you realize how much more quickly you’re accelerating. And when you have that right person in place, magical things start to happen and it really has an amazing effect on the company.

And so, at the end of the day it’s all about the people and you can’t invest enough in people and culture. I think in early parts of start-up companies, often you just focus on the product or the vision or whatever it is. You don’t focus as much on people and culture. But it’s true. It’s not just smoke and mirrors or just something that people are paying lip service to. It is all about people and we need to optimize our companies around investing in people and finding the right people and keeping the people that we have happy and motivated.

"Avoid Mind Blocks & Artificial Boundaries" - K. Pandia Rajan & Latha Rajan of Ma Foi

Latha Rajan & K. Pandia Rajan of Ma Foi ( B i o s)

In conversation with K. Satyanarayan, Co-founder of regional language publishing firm New Horizon Media. (Recorded on August 15, 2012 in Chennai.)

Highlights:

Takeaways for Other Entrepreneurs: (Click on the links for the video segments)

• Don't add artificial constraints when it comes to entrepreneurship

KPR: Separating home and work, politics & business - we tend to have many boundaries where none need to exist. These are  Western notions and mind blocks that we can revisit.

Being a Husband-Wife Entrepreneur Combination was never a major hassle for us. In fact, as Latha says often, we would have probably fallen apart but for Ma Foi!

Latha Rajan: In the early days, he used to travel 25 days a month and I used to travel 10 days a month. But since I was there within the system, I could understand (the pressures and issues). Both of us knew what we were working towards.

Entrepreneurship has given me a lot of flexibility mentally. I used to take my daughter and son to office if it was required. In fact, the 30th day after my son was born, I was in the office and I took him along.

• Employees as Members: Everyone who joins Ma Foi is referred to as a "member" (as against an employee). 

Latha Rajan: "Employee sounds so transient".

Even if someone leaves the organization (as an employee), he/she still remains a Ma Foi member (and hence an ambassador for the firm).

• Innovation in funding: Converted the company into a public limited one very early and raised small amounts from over 275 well wishers, employees & ex-employees and clients. Made sure to pay the shareholders a decent dividend each year. (Ma Foi paid 20% "religiously".)

• Vision and Values; Transparent Measurement

Growth, Diversity, Transparency and Integrity
Everyone knew how much everyone else was producing

• Role of Scale, Scope & Depth

• Decision making structure

Management through "Operating Board, Management Council and Institutional Member" meetings

• Don't seek valuation ahead of value creation

Other Highlights (The Journey & Lighter Moments)

• The Early Days: "Our Aspirations always exceeded our resources"
  
• Ma Foi the name 
  
• Struggle for Early Stage & Bank Funding
  Banks would fund someone with 20 Buffaloes rather than a business like HR Services with 20 MBAs. "Buffaloes won't run away, but your people might. Then what happens to the collateral?" 

• Early Employees: They joined us to co-create Ma Foi; not to earn a living
• Defining the Roles: "I earned and she spent"
• VC Funding, online dreams & dotcom crash
• Sale to Vedior
• Vision for Ma Foi Strategy ("Ma Foi Version 6")
  Leveraging the Triad of Consulting, Research & Education to Create a "Big 5" League Consulting firm out of India
  

The Full Length Interview Video

Video Of The Q&A Session 

Click Here to Download The Full Interview Audio Podcast - 69 minutes, 32 MB
Use Right Click & Save As to download to your desktop

Click Here to Download the Audio of the Q&A session - 8.54 minutes, 4 MB
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For more pictures from the recording event, Click Here

What Steve Jobs Did Not Want You to Know about Apple

(Pic from Betanews)

Stanford’s Entrepreneurship Corner series has another great podcast featuring Adam Lashinsky, Senior Editor-at-large, Fortune Magazine.

Here's Stanford's summary for this podcast:

Adam Lashinsky, Fortune senior editor-at-large, shares an insider look at Apple, one of the world's most iconic and secretive companies. Based on his research into the technology giant's internal processes and approaches to leadership and building products, Lashinsky offers insights and surprises from his book, Inside Apple: How America's Most Admired--and Secretive--Company Really Works.

Highlights (in our view):


* "Your Business is None of My Business"

- Even employees who worked on one part of the product get to see the final product only when it's released to the world.

- Results in effectively NO Politics in the company - after all, if you don't know what I'm doing, how can you politic about me?
- Very unlike Google (which offers free food so that employees can mingle in the cafeteria).

* The Benefits of being Secretive (with consumers before launching a new product or a new version) or
Why Apple will say NO to rumours about New Product Launches (like the Apple TV) "until it is ready to say Yes"

- Provides the opportunity to Delight Customers
- Consumers will stop buying the current product/version if they know a new version is coming out soon
- The Story about a company should be about its products

* Say NO to New Projects - Take Big Bets, But Few Bets

- Apple has launched 5-6 products in the last 15 years (Very unlike Google again)

* Spend Right

- For a 30 Second Movie Ad Clip for a product, the company spent millions to get the commercial Just Right

* Culture of Work (Not Play)

- People crave to work for Apple not for the pay and perks, but to do better work and feel privileged for it.
- It's not clear if Google's success is correlated to its being so employee friendly (in terms of free food and other perks).

* Headquarters Centric Company

- Everyone Important in the Company is based in Cupertino - so that they can have Face to face meetings!

* No fiefdoms - 1 P&L, 1 Ad Budget

* Working in small teams preserves startup culture

* Obsession over details leads to excellence
Jobs is famous for checking the screws on the INSIDE of the mac.

* Ignore Customer Research - Before a Product is Launched 

- Because "They don't know what's possible"

Listen to the audio from here (mp3) - 57:31 Minutes, 26.5 MB.
(Use Right Click > Save As to download to your desktop)


PS: In his Death Certificate, Steve Jobs's family entered "Entrepreneur" for Occupation. Wow!

"Startups, by definition, should disrupt" - Ashok Soota of Happiest Minds

At a time when IT Services is hardly the flavour of the season among Venture Capital firms, that Happiest Minds was able to attract brand name investors within a months of its founding is testament to the credibility and experience of its primary founder & Chairman, Ashok Soota. This "seasoned manager" feel is also something that comes across right through this interaction. - The Venture Intelligence Team

Ashok Soota, Executive Chairman, Happiest Minds (Bio)

Interview by Sanjay Anandaram, Founder of Jumpstartup, followed by interaction with students and other entrepreneurs at IIT-Madras on January 5, 2012. Event Co-Hosted by C-Tides, the entrepreneurship cell at IIT-Madras. More photos from the event.



Highlights (click on the links for individual audio snippets):

As a Late Stage Entrepreneur, you need to plan on a larger scale since you don't have the luxury of time

Attracting and Inspiring People: Having a Mission & Higher Purpose

- "Have a (company) name that you have to live up to"

A startup should, by definition be disruptive

- How Happiest Minds is taking on the incumbents by leveraging the emergence of cloud technologies, mobility and social media

Winning the first customers

Decision Making should be through "Head, Heart and Gut"

Don't take "bet the company" type risks

Services and Products are Different

- They Operate to Different Rhythms, Different Risks & Rewards

Click Here to Download the full length audio - 1 hr 33 mins; 43 MB
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”Focus on your 3Cs: Credibility, Cash Flow and Crew”– Rajeev Mecheri of Mecheri Smart Capital

Lessons from the Startup to Scale-up to Successful Sale of iMetrex Technologies, a building technologies and security venture catering to the Indian enterprise market - The Venture Intelligence Team



Rajeev Mecheri, Managing Director, Mecheri Smart Capital (Bio & LinkedIn)
Interview by Hari Krishnan of Venture Intelligence, followed by interaction with students at the Department of Management Studies IIT-Madras on November 9, 2011.

Highlights:



Please click on the links below to view corresponding video snippets:

• Importance of Customer Touch Point


• “What works for the company, works for you (the founder)”


• Founders should separate their lifestyle needs from that of the business


• Invest Appropriately - in infrastructure, etc.


• Decision to exit and the "strength of a brand"

• Decision to integrate vertically (getting into manufacturing)


• Following the Customers


• Innovative holding structure for acquiring a product company

Click Here to Download the Audio of the Interview - mp3 format - 52 mins; 24 MBUse Right Click & Save As to download to your desktop
Click Here to Download the Audio of the Q&A session - 21 mins; 10 MBUse Right Click & Save As to download to your desktop