14 Startup Lessons from my time as a Teenage Bartender

I was fresh behind the ears and had an empty wallet.

Nay! I had no wallet.

My first few months at IHM Pusa were spent day dreaming about how kick-ass my future in the hotels is going to be.

As freshers, we all knew that life was going to be physically and mentally demanding. We all knew it wasn’t going to pay well. But somehow we all felt it was going to be epic.

During this time I was introduced to a bunch of seniors, looked upon with a mix of mystery & intrigue, due to a dark art practiced by them after college. This dark art is known as mixology… popularly called Bartending.

Delhi laws prohibit the consumption of hard liquor till the age of 25 and I went along for my first Bartending gig at 18. (Yes I was breaking a few laws) 

These gigs were almost always part of events & parties at farmhouses and lavish houses.

I was paid a sum of Rs. 300 per day, money which I really needed, in 2003 for 8-10 hours of work, which started after 6 p.m. and would go on till dawn. 

It was gruelling work, fast paced and intense. We (Me and another friend) would work against sleep deprivation knowing well that there was no place to go to after the gig, since the hostel was too far off from where we were. We routinely fell short on attendance, had no social lives and practically gave up college for those few intense winter ‘party’ months of October to February.

What this gave me, were indelible lessons on Work, Wealth and being Wasted. 

And while I don’t think this blog is the right place to talk about lessons on Wealth or on being Wasted, I would really love to write about what it taught me about work… and as an extension… about how to run a Startup. 

I did that gig for a year. But the sights, sounds and experiences of all those fat weddings, decked up women, cigar smoking men, alcohol frenzied dance floors, coke snorting teens, farmhouses gone crazy, DJ driven environments and glitter that glittered more than gold, taught me the same amount as the stuff happening on the other side of the Bar… our side of the Bar. 

 

Here are 13 Startup Lessons from my time as a Teenage Bartender

1. Backend operations matter – It was my first day at the Bar and I remember walking up just behind the main counter (Like a stud). The main boss, the owner of the company, walks up behind me and taps me on the shoulder. He asks me what I planned on doing, so I told him I was there to become a bartender. He then points me towards the back of the bar, near the waste bins and asks me to start from there. Once I was able to recover from crushed dreams, I realised that there was a lot of work that went on in the background, to which most customers we oblivious. Every good bar will have a number of people cleaning, stacking, wiping, lifting etc to make sure that the back-end operations are able to support the guys working up front. Every entrepreneur realises something similar with startups. Its usually the stuff that isn’t glamorous which is the most important. 

2. Substance before Style – Most people, when they hear of my brief experience as an amateur bartender, always ask me if I know how to flip bottles. Thats when I usually feel like flipping a bottle at them. It’s like asking a chef if he knows how to juggle knives. Movies, pop culture and perceptions make bartenders out be jugglers who also pour drinks. In reality, great bartenders always work on making great drinks, fulfilling orders, upselling alcohol and generally controlling waves of wasted people without using a stun gun. The DJ, the bartender and the Host are the Gods of ‘Have-A-Great-Time’. I learnt that no amount of flipping bottles and tricks can ever endear a customer if he doesn’t gets his drink well made and on-time. Substance always wins over style. (Yes, I did flip a lot of bottles, but never behind the bar. And I wasn’t a good bartender, I was an amateur at best)

3. The Value of incentives – Bartenders are like high performance athletes who can turn the sales of a place on its head. They are also the most highly incentivised set of people in F&B. But most of them don’t just do it for the money. A number of factors like the music, people, reputation, style etc come into play. The best guys can handle it all, including the stress and the long hours. Organizations, with high performance employees would do well to understand that financial incentives can only drive behavior to a certain extent. You will usually be surprised what works for them.

4. Listen to your customers! – Bartenders are great at listening to customers. Over thumping music, chiming voices, a  bar which is almost always on the verge of collapse, a constantly ringing phone and general chaos, they make and serve hundreds of drinks with little margin for error. How? I was taught long back, how to cut out the noise, when I am taking an order at the bar. For a bartender it is essential that he be aware of whats going on, but when a customer starts to move him mouth and you lock eyes with him and zone out for a few seconds to everything else, including the tens of others waiting to be heard. This really helps in getting things done. To be able to focus on one thing, when everything else is in motion, is the mark of an effective entrepreneur. 

5. Success is where the pain starts – It almost always cold, wet and stuffy behind the bar. To do it day after day, for all those long hours, especially when we were serving hundreds of people, with fingers numb from picking ice and opening bottles in the middle of the December cold in Delhi, was not easy at all. It was painful at a physical level and many of us would be sick long cold nights as sweaters would damp up due to all that water, leaving us feeling wrapped up in a cold blanket. But after we were able to get through those days, we really learnt what it meant to run a bar. Startups, though started by nice fluffy things like love &  passion, almost always have a period of intense pain. If you read ‘The Dip’ by Malcolm Gladwell, you will know why its important to take stuff like this, head on.

6. Develop relationships with those at the Top and the Bottom – Yup, we always shook hands with the owners of those farmhouses, the hosts and the important guests. It was important to be connected, known and respected for our work. But we always met the kitchen staff, the cleaners and the helpers. We were always nice to them, because we knew that when the shit hits the fan and we have to run around of ice, lemons, salt, dry wiping cloths, fruits, water, cleaning solution etc, it was the guys at the bottom who mattered most. The fact that you belong to a certain social strata should never blind you from realising the worth of every man & woman, you have to work with.

7. Understand Context to understand People – Most bartenders will never judge people based on what they see of them at a party. Especially when they are drunk. They develop a sense of judgement, which most others don’t because bartenders know how to understand context. Be fair and understanding of people and situations. It has always helped me make good decisions. 

8. Discipline exists for every art – Whatever you might think of bartenders, it is probably disconnected from reality. There is a lot of effort, discipline and time that goes into perfecting the art of mixology. Speak to a great bartender, not just any, and you will find a deeply focused, centered, character driven person rather than the trash talking, fake, drunk looney we all think he is. No matter what you do, discipline exists as a prerequisite for anything we wish to achieve.

9. The Basics matter – In my limited time at the bar I realised that knowing how to pour a drink, clean a glass, keeping the bar in order, stocking juices, prep, billing and listening are far more important than knowing how to flame a Vodka Shot by breathing fire like a circus act. First make your basics solid, then worry about the rest.

10. Differentiate yourself… always – A long pony tail, a great cocktail, a powerful network, an amazing collection of jokes, lots of good stories, a photographic memory, great service, a personal touch, inimitable style, attitude etc. All these go a long way in differentiating you for the others in the market. But a look at the lesson before this one, should let you know that I really believe in getting the basics right first.

11. Do something for “The Flow’ – Bartenders usually talk about getting into the ‘Zone’, when the crowd really picks up. Its when they cant keep track of time or think about anything else but the order at hand… and they feel satisfied in that moment without any external motivation egging them on or any feedback from a superior. That’s usually what software programmers, artists, athletes experience when they say that they love what they do. This condition is called a state of ‘Flow’ by  Mihály Csíkszentmihályi. I believe that if your Startup lets you get into that state of ‘Flow’, then you will probably do it with greater conviction and perseverance.

12. Know the law, the makers and the enforcers – Its amazing how this comes naturally to most guys at the Bar. In India, a bar is usually the scene of a crackdown by the cops and other authorities. Hence the guys make it a point to know most of the authorities and those who are in a position to effect their decision making. A Startup would do well to know people who make policy and legal decisions which effect them, rather than embracing the Head-In-Sand attitude, which unfortunately, is usually the norm.

13. Shit Happens! – Yes it does. And it is your business to be prepared for it, one way or another. And more importantly to empower people at your startup to deal with it, whenever and wherever possible. A broken mixer, a bleeding hand, a violent customer, a fight at the bar, crackdown by the cops, shortage of alcohol, a jammed bill printer, a broken draught beer machine etc are events that really can not be solved over a board meeting. Your bet is then to have an employee take initiative and solve the situation. 

Enjoy this! An amazing True Originals video by Bacardi. Really captures the essence of what it means to be a kick-ass bartender.

Things NEVER to Say at your VC presentation

Here is a list of things never to say during a VC Presentation

1. Everyone is our customer – This is never ever true. Figure out the Market Size and your customer demographics. Give numbers and a good idea of what your customer is like.

2. We will kill the competition – Yeah? Unless you are Rambo reincarnated as a scrappy Startup you won’t kill anybody. Facebook has taken years to ‘kill’ Myspace. Don’t say it because you can’t prove it.

3. We will win because of First Mover Advantage – It’s obvious you haven’t done your homework or been in the real world. This statement is inexcusable. Being a First Mover means you are developing the market, educating partners, customers, developing standards, making mistakes and hiring expensive manpower… all by yourself. Except for a few cases, this is not an advantage.

4. We want to grow from 1 store to 3 stores in 5 years – VC investors want you to think Big because they make money only when you grow fast and grow well. If your goals are modest, you will put them off because then even if its a sure-shot idea, it makes no financial sense to them.

5. Exit Strategy? Only IPO – A miniscule number of startups end up living through a public offering in the world. To bet that you are one of them, is going against probability. Even if in your heart you know that you will make it to an IPO (and gut instincts count for a lot) you should be able to underline viable alternatives to your prospective investors.

6. We need $10 Million…because it’s a nice round figure – Please tell them why you need the money, how much, when and what you want to do with it. Don’t just put it there because it looks good.

7. We will promote our product/Service using ‘Word-Of-mouth’ – No one has ever been able to control this force of nature called ‘word-of-mouth’. How can you claim to use it for your goals? ‘Word-of-mouth’ is the final result of your marketing/promotions, it is not a promotion activity in itself.

8. Customers will shift as soon as they see our cutting edge technology –Apple makes better laptops than most other players. So even though it is known and respected as such, you don’t see people dumping their netbooks/laptops in dustbins for the Macbook Air. It takes more than just a better mousetrap to get things going.

9. We are technical guys and we will hire people for sales after funding – If you aren’t doing selling on your own, you should plan on getting a senior guy as part of the core team to handle Business Development and Sales. However, if none of you takes ownership for sales in your startup, then investors will have a hard time figuring out how you plan to convert your product/services into hard cash.

10. We don’t have a product/service yet – Then don’t ask them for money. They want to see proof of concept. (Admittedly some angel investors and VCs might still invest)

11. We will start as soon as we get funded – An extension of the above statement. If you haven’t started then why will VCs invest on the basis of your Powerpoint Slides?

12. We have no competition – If you say this… Then you are an idiot. There is a famous example related to this statement. When the first Insurance company started working in India, they had ‘No Competition’. But then why didn’t they capture the market without any issues. Till date the Indian customer shies away from Insurance. The answer is because LIC had a big competitor. It was God. The customer’s intrinsic belief that God will look after him, negated the value of an insurance scheme. You always have competition.

13. 2 line definition for my Product? Ah… it’s a little more complicated than that – Albert Einstein answers this one – “You do not really understand something unless you can explain it to your grandmother”. VCs think of it in the same way. Customers definitely behave like Grandmothers.

14. I don’t really have a presentation ready but… So you aren’t prepared? Too bad. We may have still been interested had you just discussed the concept with us, but the fact that you aren’t prepared at all, puts us off.

15. We will keep our customer acquisition cost low by using Social Media – Social Media is a difficult to crack medium which has been capitalized by major brands like Axe, Coke, Pepsi etc who spend big dollars on creating great social media experiences. If you think its low cost, then you are going to be ineffective at best and shoddy at worst.

16. We have a better product/service because we sell it cheaper – Subhiksha sold stuff cheaper than other stores. Look what happened to them. You should be able to communicate Benefit and Value offered to your customer and to the investors. Just because you make a handbag which is cheaper than Gucci doesn’t mean it will sell better. Point – Don’t play on the price, but on the value/benefit even if it is related to the price.

17. We will outsource the (Core Part) of our Idea – That’s just dumb, you have to prove how you will own, grow and execute the core part not outsource it because it is painless. That’s like Apple deciding to outsource the development of the Mountain Lion OS to Infosys.

18. Our competition numbers aren’t relevant because we have a vastly different product – Your competition is always relevant in some way or the other. It’s only by using their numbers that you can build projections, costs, standards, salaries, market assessments. Not being intimidated is great. Not acknowledging or being aware is a sin.

19. We are infinitely scalable – Everything is infinitely scalable given the right resources. Just like how your foolishness is infinitely scalable with the right exaggerations. While your idea may be scalable because you have a web based business or a mobile app, you need to underline the related investments for that scalability.

20. Me Me Me Me Me… The best way to turn off VCs is to go on to monologue mode about yourself/your team and how you are God’s Gift to mankind. They are interested in you, but aren’t going to be partners in your endeavour to startup narcissism.

21. We don’t really understand the finances yet –Then be prepared. Don’t go in without the numbers. Hire a CA if nothing else.

22. Our Sales in year 1 will be $1 Billion. Why? Because its common sense – In the 1940s most Germans thought that they, the Aryan race, were the most developed race on earth. Why? Because it was common sense. Some things, which you may take for granted, may not make much sense to the VCs. Please backup whatever you state with plausible numbers and facts.

23. We only need your Money – That’s what Newbies do. Sure, you primarily need the money to make your Startup grow and prosper. But for VCs, many of whom expect to be in the thick of things, this is like a red flag.

24. Let me tell about how AWESOME the internet is – Don’t start off/bore them with the obvious stuff. They know that clean tech, internet, web 3.0, eCommerce, Mobile Apps, Cloud technology etc is hot and amazing. They probably know the contours better that you. Don’t waste their time or test their patience.

25. And as you can see on Slide No. 137… No point, they slept off/were brain dead by slide 15. Please follow Guy Kawasaki’s 10/20/30 rule.

26. I am sorry I am late – We are sorry we are no longer interested. (Please never ever be late, unless you lose your arm on the way)

27. This presentation will only take 10 minutes (and then go on to 90 minutes) –Be truthful in the real sense and don’t expect them to be comfortable with IST (Indian Stretchable Time).

28. I know Bill Gates very well – Don’t drop names. And if you know Bill Gates then ask him if I can get a discount on the XBOX 360. 

29. You Guys? No I don’t know what you (The VCs) are all about – Insulting. But more than that it shows you just aren’t aware enough or care enough to google them.

30. There are really no major risks here –Bullshit! In that case Banks should be running after you to offer loans. There are always risks and you should be honest enough to acknowledge them. The investors will find it difficult to trust you and your intelligence if you don’t.

31. As you can see on this slide… no… sorry it’s the other slide… – Major turn off. You aren’t prepared well enough.

32. Knock Knock…who’s there… – While a little humor is a great thing, especially for ‘bored-out-of-their wits’ investors/VCs, no one wants to invest in a Joker.

33. Excuse Me. I need to go pee – You will pay for breaking the momentum. VCs, due to their profile and time constraints have major ADD (Attention Deficit Disorder) issues.

34. Today we are here… to Blow your mind! – Even if you have that one Idea which will change the world, this statement ensures that VCs will no longer be surprised. So unless you have suddenly invented time travel, conducting safe nuclear fusion in your bathtub or have figured out what women really want, stay away from it.

35. Let us begin with the Definition of Marketing – No, this is not college, you don’t get marks for the definition. You get funding for changing the world. Keep it nice and meaty.

The Billion $ Startup Club

A lot of people keep asking me to put up a list of 1 Billion $ valuation startups.

I kept it pending for one of those days when I felt really lazy or had nothing interesting to write about.

Today I meet both conditions.

But I will still leave you with what it means to be ‘Worth’ 1 Billion Dollars!

 

A little Calculation

$1 Billion = Rs. 5000 Crores or Rs. 50,00,00,00,000

 

Valuation? 

Is nothing but the notional ‘lifetime value‘ of your startup, that the market/investors arrives at, based on various methods, at a particular time.

So the Valuation of a startup means ‘What is a startup worth?’

Basically if a company has $1 Billion valuation then it means that over the life of the company (based on present realities), investors and markets expect the company to generate $1 Billion of money for all its investors/shareholders in total. 

This theory fails in overheated or skewed public markets as there is a fair amount of speculation which pushes/pulls share prices and hence valuations are based on market sentiments and the need to make short term profits among other variables.

What does $1 Billion Valuation look like?

+

+

+

+

+

= $1 Billion in Collective Valuation

 

Below is a list of Startups which are worth a Billion Dollars (more or less, since relevant real time valuations are hard to come by) … and what they do. 

I have not added the usual suspects… Facebook, Twitter, Groupon, Linkedin etc. I think it is time we stopped thinking of them as ‘Startups’.

[Note -Business Valuation is considered by many as more art than science. This is especially true for Pvt. Ltd companies. For startups, despite what anyone might tell you, no rule of thumb exists and definitely no formulas. If valuations were art on canvas then startup valuations are most definitely done by Salvador Dali.]

 

Yelp is a user generated local reviews website which is hitting the market with its IPO in march with a $100 Million offering giving it a $778 Million Valuation. The site boasts more than 22 million reviews, 61 million monthly unique visitors and 529,000 business pages. The site has helped many small businesses gain traction online, but Yelp largely makes it money by selling ads to these local businesses.

 

AirBnb is an online service that offers people seeking rooms, lodging, vacation rentals and other short-term accommodations and matches it with rooms on rent, owned by people who generally aren’t professional hoteliers. The business really took off during the recession, as people started looking at renting out rooms in their homes, for extra income and travellers shopped for inexpensive accommodation. With 110,000 unique listings available in more than 13,000 cities and 181 countries, Airbnb offers the widest variety of unique spaces for everyone, at any price point around the globe. A great disrupter of the hotel industry, this one is poised to become a multi-billion dollar startup soon.

 

The guys who really popularized the concept of ‘checking-in’ and hence interacting with the environment using your smart phone. Facebook has since followed suit and this has led to considerable competition. It uses gamification heavily, by rewarding users with badges and mayorships for checking in at certain places. Places which partner with Foursquare offer users special offers and discounts. On June 24, 2011 foursquare raised $50 million on a $600 million valuation.

 

ZocDoc offers a convenient, free way to find a doctor and book an appointment instantly online. ZocDoc’s mission is to improve access to healthcare. The service currently offers patients the ability to book appointments with doctors and medical specialist in the US. Its website is attracting doctor-seeking browsers at the rate of 800,000 a month. The company has raised $95 million and has been invested in by some of the biggest names in the VC industry.

 

Spotify offers streaming music from major and independent record labels including Sony, EMI, Warner Music Group, and Universal. Users download Spotify and then log onto their service enabling the on-demand streaming of music. Its deal with Facebook has helped this Swedish startup take the music world by storm. Facebook integration is now compulsory for new accounts. Users can register either for free accounts supported by visual and radio-style advertising or for paid subscriptions without ads. It now has about 2 million subscribers and 10 million users and makes an estimated $100 Million +.

 

Storm 8 is the creator of role-playing games on iPhone, iPod Touch and Android. The company has more than four million daily active users and those 200 million downloads have are on over 58 million unique devices. It boasts of a number of top mobile game titles and one of the highest valuations in its segment. But what impressed me most was the fact that until recently THEY HAD NEVER RAISED ANY EXTERNAL FUNDING. It is now looking at raising $300 Million.

 

Square  is a startup service that enables anyone to accept credit cards anywhere. Square offers an easy to use, free credit card reader that plugs into a phone or iPad. It is on track to process $2 billion worth of transactions on an annual basis and regularly records over $ 10 Million of transactions over weekends. It now has over 8,00,000 merchants who use its service.

 

Gilt Group is a privately held company dedicated to providing its members with access to coveted fashion and luxury lifestyle brands at sample sale prices. Each Gilt Groupe Shopping Event is designer-specific and held over a one day period. The production team creates a short video reel to introduce each designer and brand to its membership. Membership is by invitation only. With revenues of $500 Million and a reach of over 90 countries, this is one of those startups which is bordering on becoming a behemoth. 

 

Dropbox is one of the super-startups of the Cloud Storage market. A simple, easy to use application for individuals like you and me, who want to have a folder which they can share with anyone, anywhere and at anytime. Used extensively in colleges, communities for sharing, editing and creating content with the simplicity of drag and drop function into the folder of your choice. Though valued at around $1 Billion many respected sources have speculated that the true valuation could be around the $5 – $10 Billion mark. It is estimated to have hit $240 Million in revenues in 2011.

 

Similar to Dropbox but meant for large organizations and companies. Box.net defines itself as a cloud storage and collaboration solution for enterprises. Just like Dropbox, it is based on a freemium model. Though it recently turned down an offer for acquisition which valued the company at $550 Million, most people feel that $1 Billion is a better estimate of what they are worth. Box.net currently has 6 million users and some 60,000 businesses employ its cloud-storage software, including 73 percent of Fortune 500 companies. To give you an idea of their ambitions, Box.net has openly been challenging Microsoft for domination of the Cloud Storage Market with a number of high profile deals.

 

Rovio is the company which made Angry Birds, also known as, the only reason why most would use a tablet.  Apart from the fact that it is one of the most paid for games on mobile app stores, it has had more than 500 million downloads till date, is now part of a Hollywood Script, has seen partnerships with Samsung and just turned down an offer from Zynga for $2. 5 Billion. That’s a lot of numbers for a company that makes games about birds with anger issues and green pigs who like eggs.

 

India’s most successful eCommerce startup. Though rumours of it being valued at $1 Billion have surfaced from time to time, most people agree that it still has a few more months of explosive growth to get there. Though by factoring in PPP (Purchasing Power Parity) it probably has hit the $1 Billion mark.

I don’t think I need to say more.

Klarna is one of Europe’s leading providers of payment solutions for e-commerce. It lets people pay for stuff they have bought online after receiving it from merchants and helps create a much more trustworthy environment for transactions. It already has 600 employees and clears $2.5 billion worth of payments from 6 million consumers across 14,000 merchants and has recently raise $115 Million in its pre-IPO round.