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How addressing the four basic career stages can help addressing issues in climate and culture, amid diversity

I recently met a Series E start up that was struggling with its organisational design. In one breath, they were working to scale their existing traditional business for growth while pivoting into a larger market segment as a disruptor to a new category.

So on top of the fast, nimble machine that they had built with their team of young, energetic “intrapreneurs”, the company was building in another more powerful and dominant layer — that of the seasoned Senior Executives, management consultants, and compliance/process talent, in order to acquire and maintain both a legal and regulatory and social license to operate in the new segment.

To any outsider who sought to scratch the surface, the symptoms of the clash of cultures, lack of team cohesion, lack of empowerment and lack of aligned people, process and technology to strategy, were obvious.

Also Read: ‘Culture fit’ might be more detrimental to your organisation than you think

The organisational design challenge root causes included the sudden changes in policies, changes in power and functional leadership, the perceived new burden of process on decision making and controls, and narrowing of job design that comes from having to rapidly scale capabilities across the complexities of a regional market, while maintaining performance growth on the pressures of large capital raises.

The organisational design challenge? How to manage the big three:

1. Climate – the overall mood at the company due to attitudes and beliefs,
2. Culture – dealing with the norms, values and behaviours of the individuals, and
3. Organisational strategy – identifying and deploying the right organisational design strategies to promote change and alignment to its new agenda.

‡I believe one of the key insights to finding a quick win for its organisational design challenges sits in leveraging the capabilities of its workforce by career stage.

The four career stages

Individuals typically pass through four stages of their careers. These four stages consist of

1. Establishment,
2. Advancement,
3. Maintenance and
4. Withdrawal.

Each of the stages represents the “typical” age of a worker and the responsibilities and challenges that need to be addressed.

1. Establishment: a person, typically 21-26 years of age, who is learning the basic elements of the job and where they fit within an organisation. Those who change careers later in life also might go through this stage at a more advanced age. They need to feel a psychological contract with the organisation. This is an implicit agreement between them and the organisation that details exactly what is expected in the relationship. In addition to the salary, benefits, and perks they receive from the company, they also expect support from mentors in helping them to develop in their positions.

In any start up, this expectation can have both positives and negatives. Typically, the issue is a sheer matter of time available from Senior Executives to provide mentoring support and the constant lack or limits to the number of resources or pressure on costs from investors. This is where basic process and technology automation can help to ensure adequate support infrastructure and oversight for their everyday tasks, and career management and development systems can have a larger impact. But they still expect the support of an in-house mentor. In this company, given they make up a good percentage of the company’s early direct workforce that’s quite a significant overhead.

Also Read: Startups and organisations: Why leadership style matters

2. Advancement: Employees typically aged 26-40 years of age. They have likely forged a career path by trying out different departments across a company, and accelerated up the corporate ladder. The challenge in a Series E company is the ambiguity of both the nature and the height of the career ladder that clashes with their desire for basic support infrastructure, a clearly defined job description, and career path. This is only exacerbated in a talent-short environment, when the company is transitioning from one market segment to another and when the goalposts are still changing rapidly during the company’s pivot and on the back of regulations. In this company, this category of talent also makes up the bulk of their seasoned Executive workforce and process/compliance talent.

3. Maintenance: This individual from 40-60 years old is typically someone maintaining productivity while evaluating their career goals. They are now generally more interested in where, when, and how, they are going to retire. Most have reached a career plateau, where the chances of the individual moving up the corporate ladder are slim — for instance they never wanted to become a CxO or they just want a challenging career with travel and opportunity. The company’s new layer boasts a number of seasoned Executives at this level, and their career stage is, in fact, ideal for the role of mentor to many of its younger, and more ambitious employees. Interestingly a large number of their indirect workforce also sit in this bracket, ideal for the type of work that is being deployed. This is an inherent opportunity for capability development.

4. Withdrawal: the final stage and ending of a career. This includes, for example, a phased retirement, where hours are reduced and full retirement come gradually. Interestingly, a large number of this company’s indirect workforce sit in this bracket, ideal for the consistent delivery for the type of work that is being deployed and a prospective sustainable labour force to support their existing business capabilities and growth.

(Note: age is only used here as a broad reference point only. In today’s work environment, many workers will repeat a career stage, particularly, if they have a second career or midlife career change.)

A climate necessary for growth

Organisational strategies, in addition to supporting technology and processes, are the core of the development and transformational process for the capability development of this company, as it will facilitate the promotion of change and support the cultural and climate evolution necessary for its growth.

Four basic tactics could be considered for this deployment:

1. External ‡Diagnosis: To identify issues and problems for the company related to its goals/mission/climate/culture and make recommendations for any changes in the “org structure”. An internal diagnosis is more likely to carry unconscious biases — e.g. confirmation bias, gambler’s fallacy, probability neglect, etc.
2. Action Planning: The development of an organisational design plan in order to eliminate the diagnosed issues and determine feasibility of different change alternatives
3. ‡Intervention: Produce the exact steps necessary to create the change, e.g. career management and development systems, process and performance automation and reporting, etc. This is essential for monitoring and adaptation of execution.
4. ‡Evaluation: Tracking the overall success of the plan. Evidence of change impact should be evident on the overall organisation.

For this company, tapping into the expectations of talents offered through the basic four career stages of their workforce is a very simple tool to help them to accelerate existing and inherent capabilities to address climate and culture, and to align the diversity of their talent to their new growth and industry pivot agenda.

Also Read: From unknown to unicorn: 8 tips in running a successful startup from Grab’s pioneering employees

Through managing the big 3:

• Climate,
• Culture and
• Organizational strategy,

the company could have in place the levers to more effectively transition for growth and performance.

Word to the wise: What got you here, won’t get you there.

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The views expressed here are of the author’s, and e27 may not necessarily subscribe to them. e27 invites members from Asia’s tech industry and startup community to share their honest opinions and expert knowledge with our readers. If you are interested in sharing your point of view, submit your post here.

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SigTuple aims creates cloud-based solutions for detection of abnormalities and trends in medical data to improve the accuracy and efficiency of disease diagnosis

(L-R) SigTuple Co-founders Apurv Anand, Rohit Kumar Pandey, Tathagato Rai Dastidar

SigTuple, a Bangalore-based healthcare technology startup, has secured US$5.8 million in Series A funding led by Accel Partners with participation from IDG Ventures, Endiya Partners, and pi Ventures.

VH Capital and Axilor Partners and other prominent investors, including Sachin Bansal and Binny Bansal (Co-founders of Flipkart), and Amit Singhal (SVP Engineering, Uber and Ex-SVP, Google Search), have also joined the round.

SigTuple will use the fresh capital to expand team, bullet-proof the platform and the product for user adoption, followed by commercials, and regulatory clearances for global markets.

Also Read: 4 ways mobile apps are transforming healthcare

The company had earlier raised US $740,000 in October 2015 from Sachin Bansal, Binny Bansal, Accel Partners, Ashok Bareja, Dr. Nirupa Bareja and Debanjan Mukherjee.

SigTuple builds intelligent solutions for medical diagnosis using machine learning techniques. Its data-driven, cloud-based solutions are used for detection of abnormalities and trends in medical data, which improves the accuracy and efficiency of disease diagnosis. 

From crunching through microscopy images of blood to quantify normal and abnormal blood cells, to tracking sperm cells in microscopy videos, to localising pathologies in retinal scan images, SigTuple aims to make healthcare delivery affordable for all.

SigTuple microscope

SigTuple’s solutions allows labs and hospitals to scale by implementing a hub-and-spoke model, where the medical experts can operate from hub and devices can be installed in spokes.

The founders, Rohit Kumar Pandey, Apurv Anand and Tathagato Rai Dastidar, are all technology industry veterans, with specialisation in Big Data, machine learning, image processing and building large scale enterprise platforms.

Also Read: I unleash my frustrations at the gym – Practo Co-founder and CEO Shashank ND

Kumar said: “Our goal is to develop intelligent, scalable and affordable disease screening solutions which can empower medical experts and facilitate quality healthcare delivery to the masses. Our initial focus is on the solutions for the screening tests so that we can positively impact a larger population not only in India but globally”.

The company’s core product is Manthana, which allows SigTuple to ingest visual medical data from different devices and build a longitudinal memory. Currently, SigTuple is using Manthana to provide solutions for automated analysis of peripheral blood smear, urine and semen sample, retinal scans and chest x-rays.

SigTuple is working with large hospitals and labs and a group of medical experts in various fields to develop these solutions.

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Andy Zain, managing director of Kejora in Indonesia.

Ideabox, one of Indonesia’s longest-running startup accelerators, today announced the participants of its fourth batch.

Andalin is a service to help small-medium-enterprises deal with customs to ease import and export of goods.

Ayo Slide is a marketing tool that lets advertisers place ads on people’s smartphone lock screens.

Sevva banks on the sharing economy. It’s a marketplace that lets you rent out goods instead of selling them. It’s launching with categories for baby items, such as prams and toys, as well as bags, shoes, and photography equipment.

Limiting the number of participants

Unlike in previous years, where up to five startups formed one batch, Ideabox this year limited the number of participants to three.

Andalin, Ayo Slide, and Sevva were chosen from 15 finalists and will undergo a 120-day mentorship program. They receive US$50,000 in seed funding and US$80,000 worth of credits for Facebook marketing, and access to IBM cloud infrastructure worth US$120,000.

Ideabox is a collaboration between Indosat Ooredoo, a telco, local startup hub Kejora, and VC firm Mountain Partners.

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Taiwan used to be the strongest economy among the Asian tigers. What could now be holding Taiwan back, in terms of startup innovation?

In the middle of 2013, a year for rapid expansion, Uber cheerfully announced its official launch in Taiwan, desperately preaching advantages of sharing economy as an enthusiastic evangelist. The coming of Uber hit headlines of every major media channel. In the name of embracing creativity and innovation, a series of propaganda campaigns effectively caught people’s attention. Within a short time, more and more people chose to take Uber instead of hailing a local taxi.

In July 2014, however, Uber’s conspicuous appearance raised the suspect of its legality. Taiwanese government began to investigate whether Uber’s business fit its original registration as information service industry. Unsurprisingly, Uber was categorized under the transportation industry, requiring licensed drivers and paying more tax. What’s worse, Uber’s viewpoints on Uber drivers as contractors but not company’s staffs also diverged from Taiwanese government’s findings, unveiling the prelude leading to a fierce battle between two parties.

After getting fined nearly US$7.5 million in total because of law violations, the astronomical figure made everyone worried and finally pushed the most valuable startup, Uber, to deliberate over existing strategies. On February 10, the consecutive debates and ongoing disputes eventually came to a temporary end, with Uber deciding to suspend operation in Taiwan and looking forward to coming back when the legality is confirmed.

Also Read: Uber has pressed pause on ride-hailing in Taiwan amidst regulatory battle

While Uber’s launch in Taiwan triggered harsh conflicts between supporters and opponents, its tremendous popularity and pressing pause, to a certain extent, are warning signals signifying the internationally ignored facts about stagnation not just in the taxi industry, but also government regulations and, more importantly, the entire startup scene.

Urge transformation in the taxi industry

Taiwan has always been famous for its comprehensive transportation system with subway, buses, and taxis forming thorough networks connecting one another. Nevertheless, among the three options, taking taxi might not be the top choice for travellers not essentially because of the higher fare than other options but because of the uneven quality of services, such as absurd attitude and messy seats, along with occasional dispute regarding deliberate overcharging and intentional detours.

Despite the fact that there exists a local taxi-hailing app called TaiwanTaxi, its user experience throughout the riding journey makes passengers extremely unsatisfied and annoyed. Problems including imprecise GPS location, abrupt ads placement, and inefficient customer service are frequently reported and widespread in online forums. Worse still, some drivers were found trying to save transaction fees absorbed by themselves by pretending incapable of using credit card machine or procrastinating until passengers change their minds and, then, pay in cash.

Even though Uber pulled out from Taiwan, Uber drivers have come up with a solution in response to the absence of Uber’s platform. By letting passenger post his information of pick-up location and drop-off destination on an exclusive group created on either Facebook or Line, the replacement, also called underground service, is becoming more and more vibrant. Although the responding service is still illegal and may face suspension, passengers surveyed mostly claimed they were no longer able to tolerate traditional taxi services and were forced to look for alternatives.

Fear of blocking innovations from international players

In fact, there was a traceable precedent before Uber’s striking withdrawal. In September 2015, PayPal, one of the world’s largest Internet payment companies, announced service suspension in domestic transactions due to compliance with government’s e-payment regulations, which requires the establishment of a subsidiary and registered capital of US$16.1 million.

Although PayPal claimed it was a strategical program update, what PayPal did, indisputably, was terminate its service in Taiwan. The abrupt pause surprised and shocked the general public, online buyers, in particular, casting a shadow over Taiwan’s e-payment development. The originally lagging-behind industry became unbelievably devastated and extremely uncompetitive when one compares how fast the progression is in China and Japan.

Also Read: Taiwan needs to develop its own brand of startup ecosystem

When delving deeper into the whole context behind these developments, the undeniable truth lies in the unfavourable market size and outdated administrative orders in the country. Even though the level of consumption in Taiwan is almost the same as developed countries, the smaller population base, only 23.5 million, makes this market relatively unappealing. The conservative legal framework, which was criticised for being overprotective for domestic industry, could also deter incoming merchants from entering.

Coupled with PayPal’s pullout and other international companies’ withdrawal, people are becoming afraid of losing global recognition. The blizzard might become strong enough to stop any ventures from coming in after the Uber’s announcement of its pullout.

Worry about stagnation in Taiwanese startups

Uber’s pullout also evokes increasing concern for Taiwan’s startup ecosystem. While Garena and GrabTaxi is hatched in Singapore and Malaysia respectively, there isn’t existing any local unicorn startups in Taiwan. Those Taiwanese startups trying to expand to China or Southeast Asia mostly have failed in the increasingly competitive environment or are struggling to discover a niche to survive. Their expansions, wherever they are heading to, seem extremely tough and quite bleak ahead.

Some pointed out that the Taiwanese government’s vague regulations and the lack of practical executions should be blamed. With that said, the mindset of being complacent and the overindulgence of little happiness — referring to how its satisfaction with the status quo and lack of ambition and motivation to pursuing better — could be the contributing factors, as well.

Thirty years ago, Taiwan used to be the strongest economy among Four Asian Tigers, the other ones being Singapore, Hong Kong, and South Korea. With the rise of massive manufacturing capability, Taiwan’s economical development was accelerated to one of the top industrialised nations, creating a big picture of thriving prospect. The bright and promising signs, nevertheless, had a dramatic change in a short time with the other three countries becoming even more prosperous and tremendously surpassing Taiwan in terms of GDP per capita. Taiwan’s overall development, including startups, is no longer shinning and, more precisely, is stepping backward.

Taiwanese pride has become a thing of the past. However, under no circumstance does it mean Taiwan will permanently collapse and will be unable to ascend to the summit. As a Taiwanese in the startup scene, I still strongly hold on to the belief that Taiwan will become great someday again, looking forward to that day’s coming.

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The views expressed here are of the author’s, and e27 may not necessarily subscribe to them. e27 invites members from Asia’s tech industry and startup community to share their honest opinions and expert knowledge with our readers. If you are interested in sharing your point of view, submit your post here.

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Flutura’s platform Cerebra provides diagnostics and prognostics through machine learning and artificial intelligence to unlock new business value for engineering and energy customers

Industrial IoT

Flutura Decision Sciences and Analytics, an Industrial Internet-of-Things (IIoT) company based out of Bangalore, has secured US$7.5 million in Series A round of funding, led by Vertex Ventures.

US-based VC firm Lumis Partners, besides existing investor and Big Data-focussed early-stage fund The Hive have also participated.

IIoT incorporates machine learning and Big Data technology, harnessing the sensor data, machine-to-machine (M2M) communication and automation technologies that have existed in industrial settings for years. The driving philosophy behind the IIoT is that smart machines are better than humans at accurately, consistently capturing and communicating data.

Also Read: 6 top B2B-focussed IoT startups in India that you should meet

Founded in 2012, Flutura provides mission critical insights to drive industrial outcomes, based on its capability to interpret machine signals from connected assets and connected processes. The startup is catering to various industries, including oil and gas (to quantify safety risk to ensure sustainable zero unsafe behaviours and conditions), utilities (to identify root cause of AT&C losses, grid inefficiency and make it visible at the last mile), smart buildings (for better asset management leading to energy efficient buildings), and heavy industries (for asset optimisation and predictive maintenance to improve performance and life of assets)..

Its flagship software platform, Cerebra, provides diagnostics and prognostics through machine learning and artificial intelligence to unlock new business value for engineering and energy customers.

Krishnan Raman, CEO and Co-founder, Flutura, said: “We believe that the industrial sector is at an inflection point where digitalisation is disrupting fundamental process/product design, transforming business models. This investment round for us is not just about money, but having experienced and strategic global partners like Vertex and Lumis bolster the existing team help us in our core focus industries of energy and engineering.”

With operations in Palo Alto, Houston, Tokyo and Bangalore, Flutura serves companies like Henkel, Stewart and Stevenson and Sodexo. It has also established partnerships with the likes of Intel and Hitachi for product and market access support.

Rohit Bhayana, Managing Partner and Co-founder, Lumis Partners, said, “Flutura, in a short span since founding has accomplished a very mature solution-set for the Industrial IoT space. The solution relevance is clearly visible, from the global traction it has garnered, and the value adding use cases it has powered. Lumis, as a firm focused on the intersect of Operating Technology & Manufacturing, is excited to be associated with Flutura in this fabulous journey.”

Flutura had earlier received a seed fund from The Hive, who is focused on the Big Data and analytics space.
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You don’t always have to put everything on the line in order to pursue your dream

It’s possible to pursue your dream without using your credit card as a poor substitute for a paycheque. As someone who has been through the process, I know that having the security of a day job while you develop, test and sell your product gives you a secure foundation and minimises risks. Here’s how to do it:

Determine Product-Market Fit

It takes focus and resolve to succeed as an entrepreneur. Not only do you need passion for your business to drive you after setbacks, you need to have a market fit. In other words, people must be willing to pay for your product or service. Staying employed and investing a few months of after-hours labor during this process is far better than liquidating your savings and mortgaging your house in pursuit of an idea that no one truly wants.

Ask around to test the concept. Ask co-workers if they’d buy it. If so, how much would they spend? Don’t worry about someone stealing your idea—only bigger companies have the resources to put you out of business, and they typically insist on seeing a few thousand customers first. In fact, if someone else is pursuing a similar idea, that only validates your idea and market.

Also Read: ‘Culture fit’ might be more detrimental to your organisation than you think

Once you’re confident with your product or service, put the kids to bed and get to work. Bootstrapped businesses work best when created in the margin — on nights and weekends. If you’re single, stop going out every Friday and Saturday night. If you have a family, have a conversation about what you’re about to do so everyone understands what’s coming. Getting over the first hurdle is challenging. You have to focus and invest your time to successfully balance your day job with your dream job.

Have a Hobby That Pays

Once you have a prototype or a minimally viable product, it’s time to launch. Buy a few Google AdWords, launch a website, and put your product or service up for sale. You won’t make much at first – mostly beer money – but you will gain valuable feedback and customer insight. Starting a business on a shoestring budget is easier than ever with great third-party resources, such as Stripe for credit card processing and LegalZoom for legal documents.

Maximize Your Lunch Hours

Remember the time it took to build your product? That’s how much time you have to devote to selling it. You are the face of the brand; you are the sales team. Set appointments during the workweek with potential customers. Learn how to tell your product story clearly with enthusiasm. You have the most passion for your product — present, evangelize and listen.

Know When to Quit Your Day Job

Even after you make your first sale, it’s not time to quit your day job just yet. Be smart. Success does not come overnight, and it’s best to not preemptively quit. As a good rule of thumb, once you can cover about half your annual salary from your new business and the other half from consulting on the side, you can take the plunge.

Also Read: M-health still not enough to fix China’s healthcare problems

Additionally, keep in mind that one-time sales are a tough way to move your business forward. You’ll run through cash quickly at the beginning, and I’ve learned from experience that it’s better if your customers are generating recurring revenue through contracts, subscriptions, supplies and refills.

Don’t Sell Yourself Short

Be careful what you say “yes” to in order to win business. For example, don’t give up any portion of your intellectual property rights. Ask for money up front to cover any product improvements requested. You shouldn’t have to work for free, even to win a big piece of business.

Ask for Help

You’ll be surprised how many CEOs, entrepreneurs and other advisors are willing to help. As someone who’s been through the process, I get asked all the time and I’m happy to say “yes.” There are a lot of great communities and online resources that you can draw advice from. It also helps to know you’re not alone when you share your business challenges with other entrepreneurs.

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The Young Entrepreneur Council (YEC) is an invite-only organisation comprising the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship programme that helps millions of entrepreneurs start and grow businesses.

Brian Pontarelli is CEO of Inversoft, a platform that builds tools to help companies engage and manage their users.

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While this year’s focus will be Bangkok and other big cities in Thailand, Freshket is also looking toward Vietnam and Indonesia

Thailand’s B2B online marketplace for food businesses Freshket announced on Sunday that it has raised a six-digit US dollar first round of venture capital (VC) funding, according to a report by Dealstreet Asia.

The Bangkok-based startup raised the funding from 500 Tuk Tuks and an undisclosed corporate VC fund of a leading agricultural firm in Thailand.

Freshket founder and CEO Ponglada Paniangwet stated that the startup plans to use the funding to develop its platform, which was soft-launched in January.

“We will focus on expanding the market in Bangkok and big cities in Thailand this year. Then, if everything is on track, we may foray into Vietnam and Indonesia as the next destinations,” she said.

She cited data from the Food and Agriculture Organisation which revealed the total value of fresh food market in Southeast Asia to worth around US$350 billion, with Thailand’s share accounting for only US$50 billion.

Also Read: Honestbee joins the fray, set to launch food delivery service next week

The Freshket platform itself is an online marketplace that matches fresh food suppliers and restaurants, that also provides a workflow system to make their dealings more efficient and easier.

Paniangwet started the company based on her previous experience as a fresh food supplier, where she spent four hours every night on filling out the order forms from only ten customers.

She then tested the market by opening Freshket on Facebook; soon after about 500 restaurants and 100 suppliers registered within 48 hours. Freshket eventually joined the DTAC Accelerate Programme in 2016.

Freshket claimed to have had 20 suppliers with 2,000 items and 50 restaurants on the platform per January 10. The startup targets to have around 800 restaurans and 250 suppliers by end of this year.

Over the next six months, it is also looking to partner with third-party logistics provider to facilitate small-sized suppliers who do not have their own logistics support.

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Professor Saras Sarasvathy (left) with Manjula Sridhar, and Prasanna Krishnamurthy, founders of iKen bootcamp for early-stage startups. Photo credit: Prabhu Stavarmath.

The supersmart, know-it-all entrepreneur. I run into a handful of them every day. They say they know what the market wants. They know what the market is. They know who is the customer, what she wants, and how much she will pay for it. All this, when they haven’t yet got one paying customer for their product. And many a time, the product is nonexistent.

They think the products they are building are worth an X amount of money and there is a market of millions or even billions of dollars out there. They make these projections – or predictions, to be more honest – based on many hypotheses. Most of it is just fantasy.

In predicting the future, these bright, young entrepreneurs are nailing the first, fat nail into their startups’ coffins. Professor Saras Sarasvathy is sitting on enough data to tell me this.

“In Bangalore, they are doing more of it because they think predicting the future is the way to get venture capital funding. They are not even predicting the future to get the customer; they are predicting the future to get VC money!” Prof. Saras says.

“They have spent no time talking to the customer or actually building a product that a real customer wants. That’s my worry,” she tells me.

The professor has been studying expert entrepreneurs for over two decades and is clear about where the cracks begin.

If somebody is not paying you to build the product, you are betting that your product is something people might buy. Then, you are in the gambling business.

She is one of the top scholars in the world on the cognitive basis for high-performance entrepreneurship. Her thesis on expert entrepreneurs was supervised by Herbert Simon, 1978 Nobel Laureate in Economics. She is a professor at the University of Virginia’s Darden School of Business, and also teaches doctoral programs in entrepreneurship and business strategy across Europe, Asia, Latin America, and Africa.

We’re sitting in a dining hall inside the Management Development Centre (MDC) of Bangalore’s prestigious Indian Institute of Management (IIM). There are entrepreneurs, educators, wannabe entrepreneurs, startup enthusiasts, and management aspirants flowing in and out of the hall as we talk. A perfect setting to discuss what’s going wrong in India’s startup landscape. Before we proceed, let me admit it. I am guilty as well.

The professor begins our chat by throwing a few irrefutable numbers at me.

The flimsy probability that they cling on to

In India last year, between 285 and 416 startups – depending on your source of information – raised venture capital funding. Let’s say two-thirds of them raised first rounds of funding. The success rate for VC-funded startups is less than 10 percent. If nine of 10 fail, there will be around 30 startups left standing.

“Those are the only ones that will actually do anything wonderful with VC money – in the entire country,” she says. I squirm.

Photo credit: gratisography.

Then she throws the killer punch.

“The probability of you getting the VC money is low. The probability of you succeeding after getting the VC money is low. And – the biggest nail in the coffin – suppose you get the VC money and you succeed, the probability that you will still be CEO of the company is 50 percent of that.” Why? “Because the moment you sign a term sheet with a VC, there is a 50 percent chance that you will not be CEO the next year.”

These are not numbers that the professor pulled out from thin air. They are actual numbers from the National Venture Capital Association in the US.

This is the exercise that the professor makes entrepreneurs do. First calculate the probability that you will get VC money. Then calculate the probability that you will succeed. Then the chances that you will actually be running that successful company. “That probability is actually worse than winning the lottery,” she points out.

Then why the hoopla around venture capital funding, she asks.

See: Something’s rotten in India’s startup scene – and it’s time to call it out

The nonsensical hype that we propagate

Mea culpa. As a journalist covering startups, I let out a cheer every time I hear news of a startup raising VC funding. So I am a key cog in the machinery that has produced the nonsensical hype around venture capital.

Even in the US, which has the strongest venture capital market in the world, only about 1,000 of the 500,000 employer firms – companies that actually employ people and not just file taxes as an entity on paper – get any venture capital funding. The rate of failure among them is also 9 out of 10.

“But if you look at the average company – not just the VC-funded ones – the failure rate drops to 50 percent. So I don’t understand why people chase venture capital funding,” the professor exclaims.

In Bangalore, most entrepreneurs don’t think that bank funding is even an option. Bank money would be very cheap money and patient money compared to VC money.

She points out that of all the companies that trade publicly, about two-thirds don’t take any venture capital money. “They are getting their money from somewhere else. So the question you ask is how are they building their company,” she says.

It turns out that these successful companies get their money from customers. Or suppliers. Or both. Microsoft is a big example, the professor points out. “Who funded Microsoft? IBM. IBM paid Microsoft for their software because they wanted that. That is how Microsoft was built. When the customer actually pays for what you are building, you have built something that the customer actually wants. Then you can turn around and sell that software to others too,” she says.

This is the kind of stakeholder partnership that the professor is championing as a viable alternative to venture capital funding, which she finds akin to gambling as it’s based on predictions.

She explains the ideal scenario to me: a supplier gives you credit to source material, a customer gives you an advance, and you build. Then you have proof that your product is valuable. If a customer is already paying, you know that what you are building is relevant. You are no longer placing a bet.

“If somebody is not paying you to build the product, you are betting that your product is something people might buy. Then, you are in the gambling business,” she says.

“VCs are willing to place that bet. And that’s okay,” she adds. Her gripe is not with investors or even the venture capital model. But with “the impression that the only way to build a successful startup is through VC money.” That’s the perception she wants to fight.

“I have nothing against the VC-funded startups. There are a certain kind of companies for which venture capital is perfect and the firms also do very well.” Uber, Airbnb, and so on. But the deafening noise around those few biggies are turning out to be the death knell of countless startups whose primary activity is chasing VC money, she feels.

See: Bangalore’s the 2nd best funded startup hub in the world, outside the US and China

The effectuation movement

A lot of the time, entrepreneurs are not thinking hard enough about what they need the funding for. “They think they are going to use the money for X,Y, and Z. But in reality, because they have money, they end up building software that’s not really customer-relevant,” the professor tells me.

“In Bangalore, most entrepreneurs don’t think that bank funding is even an option. Bank money would be very cheap money and patient money compared to VC money,” she points out.

Back in 1997, she travelled across the US, interviewing 30 entrepreneurs who founded companies with multi-million-dollar valuations. She studied each of them, quizzed them on decision-making, and drew out patterns. From this, she came up with a theory of entrepreneurial success called effectuation.

In a nutshell, the effectuation theory revolves around a few principles successful entrepreneurs practice:

1) Bird in hand: This encompasses all your means – the resources you have, skills you possess, connections you can use. Expert entrepreneurs start with this. They assess their means first and then imagine the possibilities that could come out of it.

2) Crazy quilt: Expert entrepreneurs partner with stakeholders like customers and suppliers to build the venture. They get pre-commitments right in the beginning. So the uncertainties are minimal. Together with stakeholders, they co-create.

3) Affordable loss: At every step, expert entrepreneurs have a clear understanding of what they can afford to lose. They are not chasing huge all-or-nothing opportunities. Instead, they take actions where even if they don’t get what they aim for, they can afford to lose what they have spent in time, money, and effort.

4) Lemonade: When the unexpected happens – as it always does – expert entrepreneurs interpret it as clues to create new markets instead of looking at it as bad news.

5) Pilot in the plane: Expert entrepreneurs just focus on activities they can control.

These five principles were at the core of successful ventures, the professor found. She has been studying entrepreneurship for the last 20 years and sharing her findings with the world.

And it arrived in India

An iKen session is on. Photo credit: Prabhu Stavarmath.

Two years ago, entrepreneurs Manjula Sridhar, Prasanna Krishnamurthy, and Thiyagarajan M attended a workshop by the professor on effectuation. They were stunned to encounter a framework that explained the patterns of decision-making that influenced the success or failure of ventures so succinctly. “If only someone had taught us this before we started our first companies,” they thought.

If only someone had taught us this before we started our first companies.

All three of them were volunteers with think tank iSPIRT, and they went up to Sharad Sharma, iSPIRT’s benign founder. Together, they along with Professor Saras created a program to help first-time entrepreneurs manoeuvre entrepreneurship. They named it iKen.

The program begins with a six-week boot camp, with mandatory assignments for participants aimed to bring clarity on ideas and develop action plans. Each task is designed with effectuation principles in mind. Every Sunday, the cohort meets, discusses progress, and does a course correction wherever required. You graduate if you complete all tasks. Even after the six weeks, you are encouraged to attend meetings and help others and yourself succeed.

“It’s a gym, not a school,” Prasanna tells me when I go to attend the first lesson of cohort 8. “We will tell you what skill is needed. It is up to you to do it. We’re only going to be like the trainers at gyms who will stand by and tell you techniques to lift weights. You have to lift the weight yourself,” Manjula adds.

Getting VC money is like winning the lottery. Chasing that is an enormous waste of an entrepreneur’s energy.

The iKen program started in Bangalore in May 2015, and now has chapters in Pune as well as Atlanta in the US. Like all iSPIRT initiatives, this too is run entirely by volunteers. Manjula and Prasanna lead it along with a growing bunch of anchors, who were part of the earlier cohorts, found it transformative, and stayed on to help others and learn themselves.

Founders of iKen Prasanna Krishnamurthy (left) and Manjula Sridhar. Photo credit: Prabhu Stavarmath.

I enrolled for the camp in November last year and have been learning to rewire my brain. Brutal feedback from the founders and anchors definitely speeds up the process, I swear.

The measure of success

The success of iKen is measured with a whole new scale. Unlike incubator or accelerator programs where raising funding is the usual yardstick, iKen aims for three outcomes:

1) You realize that entrepreneurship is not your cup of tea and drop it to go back to a regular job.
2) You realize what’s wrong with your idea of startup and pivot.
3) You co-create your startup with key stakeholders such as customers and suppliers.

“Any of these three is a success for iKen,” Manjula explains. The program already has examples for all three.

• Prabhu Stavarmath, who was working with EMC and wanted to build an online aggregator of gyms, found that his idea didn’t stand the vigorous test. He dumped it and started up with an entirely different idea, BookaCan – which lets you order a quality-tested can of water online.
• Software engineer Chiran V.J. joined iKen to build his own venture but realized that his mental makeup is better suited for other roles than entrepreneurship. His expertise was with technology and so went back to the corporate fold. He now works with PayPal.
• Rohan Havaldar, founder and CEO of Evok Analytics, was heading for disaster – or so he tells me. “I course-corrected, chased customers – instead of VCs – to build my product,” he says. He now has four paying customers and is poised to scale up Evok.

What is wrong with aiming to build a company that would pay everybody’s bills, last for some 20 years, and may be get sold for US$20 million?

There are many more such examples from iKen. “Quite a few simply drop out of the program as well,” Manjula says. “Not many can handle it well when someone calls out their bullshit,” Rohan quips.

Can the growing popularity of the effectuation framework of entrepreneurship kill the venture capital model, I ask the professor. She laughs before saying: “I want VCs to survive. I think we need multiple models of funding for startups. While I think the effectuation model catching on won’t affect the VC model in any way, I hope it will affect the hype around the VC money.”

Many entrepreneurs who could be building strong, sustainable businesses are not doing it currently because they are just spending all their time chasing VC money. “Getting VC money is like winning the lottery. Chasing that is an enormous waste of an entrepreneur’s energy,” she says.

Think logically, she urges me. VCs aim to fund startups which they think are shooting for the moon. “Very few companies will become a billion-dollar or multi-billion-dollar business. What is wrong with aiming to build a company that would pay everybody’s bills, last for some 20 years, and may be get sold for US$20 million?” she asks.

What is wrong with that as a dream for a startup? We could do with more of those, instead of only chasing after unicorns.

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Photo credit: Pixabay.

The World Health Organization requires a pathologist to spend 20 minutes examining a blood smear on a slide under a microscope before ruling out malaria if no parasites are seen. You can imagine how fatigue, an urge to get home, or some other distraction can disrupt that requirement – and the consequences of the disruption. Wouldn’t it be better for everyone concerned if the spotting of parasites could be automated? That’s the sort of thing healthcare AI startup SigTuple does.

Today SigTuple, which uses computer vision and artificial intelligence for diagnosis, announced series A funding of US$5.8 million. This is the largest investment in a healthcare AI startup out of India. It will help SigTuple scale up and go global.

Accel Partners led the round. Other investors include IDG Ventures India, Pi Ventures, Axilor Ventures, and Endiya Partners. Solid backing for the Bangalore-based startup from marquee investors signals the arrival of Indian AI on the world stage. Ex-Googler Amit Singhal, who is now senior VP with Uber, and WhatsApp’s Neeraj Arora also invested. Flipkart co-founders Sachin Bansal and Binny Bansal, who joined Accel in SigTuple’s initial funding of US$740,000, participated in this round too.

The prolonged diligence process was a ripple effect of the shutdown of “nano-prick” blood-testing firm Theranos in Silicon Valley.

It took several months of discussions before the series A round could be closed, SigTuple co-founder and CEO Rohit Kumar Pandey tells Tech in Asia.

Partly, the prolonged diligence process was a ripple effect of the shutdown of “nano-prick” blood-testing firm Theranos in Silicon Valley, after its faulty results to patients were exposed. As SigTuple’s first product Shonit was for blood tests, the Theranos question would immediately pop up.

Unlike Theranos, which came up with new testing models with smaller blood samples, SigTuple uses the same tests and slides for examination and diagnosis as pathologists do, explains Rohit. It only automates the process for more consistent and faster results.

See: Half the work people do can be automated: McKinsey

The pieces of the puzzle

SigTuple microscope with smartphone attachment. Photo credit: SigTuple.

The first piece of the puzzle is to digitize the slides. For this, SigTuple attached mechanical components and a smartphone to a regular microscope. The smartphone does an auto-scan of the slides.

SigTuple’s AI engine then takes over, learning to classify and tag the visual data. The fact that it can not only churn out results, but also support it with visual evidence makes it easily verifiable, points out Rohit. For example, it doesn’t just tell you there are 200 neutrophils in the blood sample – it can also show the neutrophils.

Even a layman can see the self-learning AI engine at work, as it learns to classify and tag various elements in the images.

AI has become such a buzzword that many a startup attaches the tag even if it’s plain data analytics going on at the backend. It can be hard to verify also how much of the number-crunching is simply human. But with SigTuple’s Shonit, “seeing is believing,” says Rohit, because it deals with images and video and not numerical data. Even a layman can see the self-learning AI engine at work, as it learns to classify and tag various elements in the images.

Rohit and his co-founders, Tathagato Rai Dastidar and Apurv Anand, earlier worked together at American Express’s big data lab in Bangalore. It was while building the big data stack that they started dabbling in AI. But instead of fintech, where a number of players are trying to apply AI, they chose healthcare.

Firstly, they were excited by the huge amounts of images and videos which would be the raw data for their AI engine. Secondly, they picked pathology, where images are not digitized, instead of a field like radiology which does have digitization. This gives SigTuple a headstart because its modified microscope gathers digitized images not widely available. The differentiator in AI comes mainly from the quality and quantity of data that goes into the AI engine, points out Rohit.

See: Meet the artificially intelligent sales gorilla that closes deals faster

Pilot programs in hospitals

SigTuple has tied up with partner hospitals and diagnostic labs for a supply of visual data to feed its AI engine. It has also been running pilot programs in 17 medical institutions to validate its AI product.

An early experiment was with a panel of pathologists who agreed to try out the product. A comparison of results – such as the haemoglobin count – found the AI count was nearly identical with those of traditional, more time-consuming methods. Where it makes a bigger difference with reliability is in the manual parts of pathological tests and analyses.

The series A funding will now help in scaling up. SigTuple has partnered with a microscope manufacturer to produce the modified, smartphone-attached devices in larger numbers. So far, they were made in-house.

See: Hopes and fears over AI alliance of Google, Microsoft, Amazon, Facebook, IBM

SigTuple co-founders Apurv Anand, Rohit Kumar Pandey, and Tathagato Rai Dastidar. Photo credit: SigTuple.

The bigger ambition is to go global. For this, its product will require US FDA (Food and Drug Administration) approval. Rohit is optimistic because a US startup Arterys, using medical imaging and AI to help doctors diagnose heart problems, got the nod from FDA recently.

The main challenge lies in adoption of AI technology in healthcare, which is more sensitive than fields like ecommerce or even fintech. But it has huge potential for social impact, especially in countries like India with a scarcity of medical resources for a large population.

“India’s healthcare challenges need smart solutions,” says Kris Gopalakrishnan, former CEO of Infosys and chairman of Axilor. “SigTuple’s AI-led diagnosis solutions enable smart and faster diagnosis at one-tenth the cost.”

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Flutura CEO and co-founder Krishnan Raman speaking at Tech in Asia Bangalore 2016

Vertex Ventures, the venture capital arm of Singapore government’s sovereign wealth fund Temasek, has led a US$7.5 million series A funding of Bangalore-based industrial IoT (internet of things) startup Flutura. US-based Lumis Partners participated in the funding.

This is the largest series A round for any Indian startup in the exciting new world of the industrial internet. Last year, Pune-based Altizon had a series A round of US$4 million led by Indian IT services giant Wipro.

But there’s more to it than the money, says Krishnan Raman, Flutura CEO and co-founder, to Tech in Asia.

Fitbit for machines

Instrumentation on an oil rig. Photo credit: Pixabay

First, a quick word about what Flutura does. Krishnan’s co-founder Derick Jose described it best to me in an earlier interview as a “Fitbit for machines.”

Flutura’s Cerebra product goes beyond using sensor data to monitor the condition of machines over the internet; it uses deep learning to predict outcomes and pre-empt problems. From an oil rig in Houston to the world’s largest adhesives manufacturing plant near Shanghai, a range of large industries are using the Indian IoT product to cut downtime and expenses.

The thought behind the funding was to get a team to help us move forward smartly. It wasn’t just the money.

An hour’s downtime in an oil rig, for example, can cost US$30,000-200,000. Henkel’s dragon plant in China can save time and reduce waste by nipping problems in the bud. The Flutura product tracks and analyzes data on ingredients and other parameters to predict faults in high precision adhesives that go into aircraft wings, for instance – before the adhesives are made.

Flutura, which already had an impressive roster of clients in the US and Europe, was one of the stars at the Tech in Asia Bangalore conference last year. This opened doors to Japan, leading to a sales and distribution agreement with Hitachi a few months after the conference.

See: How Tech in Asia Bangalore opened doors to Japan for this IoT startup from India

Now, the deal with Vertex Ventures will give Flutura access to Temasek’s global portfolio of engineering services and industrial manufacturing companies. “Our partners will open doors for us, conversion will be our responsibility,” says Krishnan.

“They are growing internationally, and we can help them grow. We can add more value than capital,” adds Ben Mathias, MD and India head of Vertex Ventures, who is joining the Flutura board. “As part of our diligence process, we introduced them to Temasek portfolio companies. All of these introductions led to more detailed discussions on business possibilities. Four or five engagements are going on right now,” Ben tells Tech in Asia.

Former GE bosses now bat for Flutura

The funding from Lumis is equally strategic because its chairman Scott Bayman headed GE India, and managing partner Rohit Bhayana headed GE Software Solutions.

The American giant is a pioneer in industrial IoT. Flutura’s Cerebra has been competing with IoT products built on GE’s Predix platform to win global clients.

GE’s Predix grew out of the software solutions unit that Rohit Bhayana headed. Rohit joining the Flutura board after the series A funding, therefore, has special significance.

If I wanted a feature and it would take me a year to get it done in GE, Flutura would do it in a month or less.

“I think the market will see a dozen strong players in the industrial IoT space. And as of now, there are only two or three. So we see a huge play for a company like Flutura,” Rohit tells Tech in Asia.

He believes Flutura’s nimbleness, combined with strong tech and experienced founders, gives it competitive advantages over even a behemoth like GE. “If I wanted a feature and it would take me a year to get it done in GE, Flutura would do it in a month or less,” says Rohit.

Cloud-based deployment plus tech talent’s preference to work with startups rather than large companies levels the playing field and even tilts it toward smaller companies in emerging fields like industrial IoT, he feels.

See: This IoT startup is competing with GE and winning. Here’s how.

“Vertex Ventures can help us with customer acquisition and market traction; Lumis Partners can help in improving operations and sharpening our product,” says Krishnan. “The thought behind the funding was to get a team to help us move forward smartly. It wasn’t just the money.”

The backing from global investors and clients for a cutting edge industrial IoT software product from India also has a broader significance. India is known as the backoffice of the world for IT services and outsourcing. The hope is that the country will move up the value chain with innovative software products and intellectual property. The success of startups like Flutura point the way forward.

See: Why India must fix its obsession with software services and pivot to products

The three co-founders of Flutura – Krishnan, Derick, and Srikanth Muralidhara – earlier worked together for over a decade at leading IT services firm Mindtree. They are experienced engineers and managers used to dealing with global clients. This stands them in good stead in competing with the likes of GE and winning global markets with their IoT startup.

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