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Building a successful startup is all about timing - what makes and breaks a new business

A serial entrepreneur explains what is important to make or break an innovative business
(Image credit: Shutterstock / 4PM Production)

Shirish Nadkarni is one few entrepreneurs who are able to claim to have exited successfully from every company he ever founded.

His initial company, TeamOn Systems, was one of the first pioneers in the SaaS model that provided users with high-end email and calendaring through the cloud. While not everyone was aware of the significance of this idea in 1999 and the company was forced to switch to a different service, it went through the acquisition process by BlackBerry within a couple of years.

In 2007 Nadkarni established Livemocha the first company in the field of language learning to implement a dialogue-based approach to teaching. While it wasn't profitable, Livemocha quickly accrued millions of users, and was later purchased by Rosetta Stone.

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Then, there was Zoomingo an app for mobile devices which helped customers locate businesses that were offering promotions in their region. In the beginning it was able to make it into the top ten of the Apple App Store (and top 25 on Android) and then it was later bought by.

But, Nadkarni suggests his shining report card does not necessarily give an accurate picture. He committed a lot of mistakes during the course of his career. Although an exit is the ultimate goal of most businesses, Nadkarni never enjoyed the possibility of selling his business on his own terms. He only sold when he desired to.

A degree at Microsoft

Nadkarni was in America in the US in the 1980s to pursue computer science, which was not taught as often in India. "I was fascinated by computers; what you could do with them, what you could build," Nadkarni explained.

After graduation at the University of Michigan, he took on the MBA through Harvard Business School, with the goal of pursuing the entrepreneurship field. He was hoping to learn combine technical expertise and business acumen which was being used to amazing success within Silicon Valley.

But, Nadkarni suggests his education was only really started when his employment at Microsoft. He gained the practical experience and a sense of appreciation of the traits that distinguish a great idea from a weak one.

"I learned a lot at Microsoft," he stated. "I learned to design and launch great products, and I was able to understand what business strategies. Thus, I gained a solid foundation I could apply to be effective in the entrepreneurial world."

It's difficult to comprehend that, but Microsoft was a start-up at the time that Nardkarni first joinedthe company, having around 1,000 employees. In the early days Microsoft was seeking to expand into new product lines that went beyond office software, and Windows OS.

At first, Nadkarni was brought in to assist in the launch of Microsoft's first product for email, Microsoft Mail, but Nadkarni was eventually involved in many major projects during his 12-year time.

The year 1997 was the time that Nadkarni became Microsoft's chief of staff for its first venture into the market of search. After some debate Microsoft made the decision to join forces with a third party, Inktomi instead of creating the search engine internally. Nadkarni states that he tried to persuade Bill Gates to invest more resources in search however Gates "wasn't ready at that point". It's interesting to think about what could have happened had his choice had been different.

A serial entrepreneur explains what is important to make or break an innovative business
(Image credit: Microsoft)

In the same year was when he designed the introduction of Microsoft was not ready to join the party and was looking to take on competitors like Yahoo! and Excite however, Nadkarni was able to pull a trick off his sleeve: the 500 million Hotmail acquisition, the largest Microsoft acquisition at the time.

The reason was that Hotmail was the first service to let users access their email via a internet browsers, would provide users with reasons to come back to MSN every now and then. "We were looking to develop an enduring solution that would keep people returning. Email is a persistent application. People go through their emails several times throughout the each day." the CEO explained.

In the end, MSN grew to become one of the biggest web sites, and it is in the present. It wasn't only the strategic benefits of Hotmail that made Nadkarni enthusiastic - he'd become a fan of Hotmail as well.

"I believed that Hotmail was an excellent ideato provide a web-based email service to consumers. Therefore, I thought that why not provide enterprise-grade cloud email?"

In the midst of dotcom's boom Nadkarni said goodbye to Microsoft and set out to create a business that was his own. TeamOn Systems.

False perceptions and errors

While Nadkarni is now retired from business but he's still occupied by a new endeavor that is writing. The first book he wrote, From Startup to Exit, is a comprehensive guide for founders who are just starting out.

Most startup guides concentrate on a particular aspect, Nadkarni says, but only a few go through every stage of the entrepreneurial process. One of the most difficult hurdles for entrepreneurs is the choice to begin an organization at all.

"There are many misconceptions about what makes an entrepreneur; you don't need to have started a business by the age of 15, or be a visionary leader like Bill Gates or Elon Musk," Nadkarni said.

He admits that leadership qualities are essential, but he says that there are more essential traits: a keen eye for sales, a knack for selling and perseverance when faced with challenges.

"In certain ways entrepreneurs are made in the same way since they share a set of characteristics. However, you can be quiet and effective when you are compensated in the different areas."

When asked about the most frequent mistakes founders who are new, Nadkarni told us that the majority of people approach business from the wrong angle, for example, making a product before they've got a problem to resolve.

A serial entrepreneur explains what is important to make or break an innovative business
Bill Gates, under whom Nadkarni worked at Microsoft

"Often techies will develop an application and then find out the existence of customers later. However, the most interesting companies of the moment - like those of UiPath, Apptio etc. All of them are based on specific issues that were identified by their founders." the man explained.

This is an error Nadkarni admits to having made. He claims he believed that cloud-based email systems is a huge hit among businesses, but He didn't conduct the required market study. "I was the typical arrogant technologist."

This type of backward-looking approach to product design can lead to additional problems later particularly in the area of fundraising. It's fine to provide venture capital companies with a beautiful technology, and to tell a compelling story however, without proof of their effectiveness, they're unlikely to make a decision to invest.

Nadkarni believes that many startups try in raising money too early. Starting a new venture is a lot to be done with timing, he states that the same could be said about knowing when to let one go to the side.

To sell or to not sell

When Nadkarni discusses selling TeamOn Systems and Livemocha, two significant achievements in his business career and with a sly touch of nostalgia.

Many business professionals wrote about the difficulties of being able to determine when to sell, but in reality, a lot of founders realize that the decision is handed to them. This was the case with Nadkarni who discovered that he was dependent on the circumstances.

In the instance that of TeamOn Systems, the dotcom bubble had burst, and the company was forced to choose between taking a less than favorable offer of money or selling the company to BlackBerry.

Then, a few years later the decision to sell Livemocha was required due to the economic downturn. Even though the company had accumulated many users however, it was still not making a profit, which caused raising funds in the current economic climate nearly impossible.

In the past 18 months, however, numerous founders will also be in similarly challenging situations, due to the most recent black swan-related event known as the pandemic. Many of them will have faced no choice other than to close their business completely.

The bright side, Nadkarni suggests, is that, from the rubble of an incident like the pandemic, a new wave of innovation nearly always comes up. Particularly, he predicts an increase in the usage of automated systems and other AI-powered technology as well as a steady change away from full-time work and the continued growth of direct-to-consumer models for e-commerce.

At present, Nadkarni spends the majority of his time helping entrepreneurs start their own businesses. If asked if he'd like to launch his own business in the future perhaps to take advantage of the latest trends, Nadkarni laughed and then turned his head. "But I'm certainly working on another book."

Via Tech Radar

Building a successful startup is all about timing - what makes and breaks a new business Reviewed by John Colston on 10/05/2021 03:33:00 AM Rating: 5

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