Indo US Ventures: Lessons Learned

John W. Mullins London Business School

John Mullins 2009

Lessons from ContentSense

Web 2.0 founders must focus on monetising the user base
The idea: Sell to enterprises, but no experience in doing so Revenue is not important. You dont get it, Vani!

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Lessons from Cellsol

Beware a biz plan that is very general: mobile telecom a large market, but customer pain not clear Building a luxury vehicle when a simple transportation device was needed Beware of serial entrepreneurs, not as hungry as before No sense of urgency from the entrepreneur: What must I do today?
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Lessons from Gleduport

Double check your own biases: Vanis concerns
Feared a possible backlash by schools against shipping education to India Can tutors overcome the Indian accent, understand Western educational culture? Promoters doing too many things
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Lessons from Travel-King

Fundamental shifts in the market can be very attractive: travelling for fun! Very capital efficient, travel agents pay cash deposits to join Making a hungry small guy with big dreams successful a good way to invest
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Travel-Kings Progress
IUSV deal done at $11m post money, second round 2 years later at $65m In 1,200 cities by early 2010, 28,000 transactions per day, $4.5m profit Why? Big benefits to travel agents
More commission than before Real-time inventory and ticketing, against cash deposited with Travel-King in advance Makes their lives easier
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Research Question
How do entrepreneurs (and investors, too) best assess market opportunities?

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The Conventional Wisdom

Three crucial factors for entrepreneurial success
Management Management Management!

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In the Words of Warren Buffett

When a business with a reputation for poor fundamentals meets a management team with a reputation for brilliance its the reputation of the former that remains intact.
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Point of Confusion #1: The Market / Industry Distinction

Whats a market? Whats an industry? These are frequently confused!

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The Seven Domains of Attractive Opportunities

Market Domains
Market Attractiveness

Industry Domains
Industry Attractiveness

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Point of Confusion #2: The Macro / Micro Distinction

Large and growing markets are important, but Structurally attractive industries (in a five forces sense) are also important, but

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The Seven Domains of Attractive Opportunities

Market Domains Industry Domains
Industry Attractiveness

Macro Level

Market Attractiveness

Micro Level
Target Segment Benefits and Attractiveness Sustainable Advantage

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Point of Confusion #3: Whats Crucial about Entrepreneurs and Their Teams
Its not found on their CVs Not simply about chemistry or character or entrepreneurial drive

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The Seven Domains of Attractive Opportunities

Market Domains Industry Domains
Industry Attractiveness
Ability to Execute on CSFs

Macro Level

Market Attractiveness
Mission, Aspirations, Propensity for Risk

Micro Level

Team Domains Connectedness up and down Value Chain

Target Segment Benefits and Attractiveness

Sustainable Advantage

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In Summary, for the Seven Domains

A systematic approach Scores are not additive: summing the scores across the seven domains is meaningless Strong scores at the micro level can mitigate poor macro-level scores
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Why Consider the Seven Domains?

Identify key weaknesses
Questions to be answered

Suggest avenues for reshaping the opportunity if not mitigated by other domains Identify key strengths
Crucial in telling your story to your investment committee or resource providers
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Remember Warren Buffetts Words

When a business with a reputation for poor fundamentals meets a management team with a reputation for brilliance, its the reputation of the former that remains intact.
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For the rest of the story The New Business Road Test

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