Five-ish Team Building Pitfalls Faced By Startups in India

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Building a team under the best of circumstances is difficult at best. As technology entrepreneurs, we will look for co-founders or senior management team members that have experience in engineering, sales/marketing, biz dev, management, fund raising and so the list goes on. In places like New York or Silicon Valley or London, it’s a bit easier to connect with the appropriate people and convince them to join your crazy idea.

Management/Co-Founding Team

In India, specifically, New Delhi, it’s a completely different ballgame. Though the word “startup” has become en vogue for college grads and those early in their careers, it’s still not something that more experienced people are comfortable with. Cities like Pune or Bangalore may be a bit different but it is rare to find someone at a startup that has 10 or 15+ years of sales experience, for example. Out of all the startups that I have come across in Delhi, I can only think of one startup that had a solid co-founding team out of the door and was also hiring senior sales, engineering, and operations folks very soon after starting up.

Finding an experienced team for a startup is very difficult, mostly because successful fist timers either continue on with their venture for various reasons, they cash out and join a VC firm or they disappear for a few years on an extended vacation. Very few of them become serial entrepreneurs and not many of them take on mentoring first time entrepreneurs.

Already having a network of entrepreneurial folks is the ideal situation but since that’s not necessarily the case for those of us not living in India, you can also try a recruiter to help you find an experienced management team, though, recruiters weren’t very useful for me when trying to put together my co-founding team.

I would suggest using personal and professional networks, organizations such as TiE, HeadStart, and Proto to start building a network of potential co-founders and senior employees well before you’ve made the decision to startup in India. If you’re not in India, I would strongly advise creating a budget for traveling to India a few times prior to moving to spend time and meet with some of the people you’ve identified as potential co-founders/senior team members.

Obsession with Entrepreneurship

India truly is a land of entrepreneurs. Everyone ranging from the corner grocery “thela” or pushcart, to the founders of Reliance and Tata are entrepreneurs. What this means in the context of startup team building is that it’s very hard to find good people who want a job a for very long. Generally speaking, competent people in India are perpetually trying to figure out how they can go off on their own and be their own boss. Many times they will get a partner like a friend or relative but rarely will they join a startup where they aren’t at the top of the pyramid.

There are plenty of engineers, sales/marketing people that start up a business of their own on a daily basis, most typically a service oriented business because of the low capital requirements.

One of the ways you can use this entrepreneurial desire in Indians to build your own startup team is to seek out those you want to start their own business. Nurture them, mentor them, and give them equity in your business as well as look at the possibility of funding/incubating their business ideas. Though they may not be ready to be co-founders in your venture, they very well could be superstars in your startup and when the time is right, they may even be your first angel investment.

Being a No Name

Another stumbling block to hiring a strong team is the Indian obsession with brand names. Indian families place a great deal of stress on their kids to go work for a large brand name company. In technology, this means college grads looking for jobs at a foreign multinational corporations (“MNCs”) like Microsoft, Google, Yahoo, Nokia, Motorola, etc. or one of the Indian multinationals like Wipro, TCS, Infosys, HCL, etc. (referred to as The Axis of Evil by Vishal Gondal of IndiaGames). Startups obviously haven’t developed a brand name so recruiting good talent in India is much harder.

Because of the emphasis on brand names in India, what happens is that most of the great talent gets sucked up by the big MNCs and large Indian MNCs who hire 20,000+ engineers yearly. What’s left over goes to the second and third tier tech companies. Finally, whoever didn’t get a job anywhere else submits their resume to more or less every job opening on Monster India, Naukri, etc.

However, there’s no reason you can’t build a brand with a little bit of money and some time. Build your brand by blogging, engaging with people on Twitter and contributing useful, insightful comments in the appropriate Linkedin groups. You’ve all heard this stuff so let’s move onto the fun stuff. Give your time to an entrepreneurial organization like TiE, HeadStart or Proto. Organize events, speak at events, create presentations and if possible, get some press coverage. Traditional media in India still has the breadth and depth of distribution that new media hasn’t been able to achieve yet. Organize and hold BarCamps or similar unconferences and promote yourself and your startup accordingly. You probably won’t be able to build a nationwide household brand name in a few months or a year but you will be able to build a localized brand name for your target audience, potential co-founders and employees with an entrepreneurial bent for your startup.

You can also use the Indian job sites mentioned above but you’ll be buried under a deluge of resumes. Good luck sifting and sorting those few hundred resumes to find the diamond in the rough. It happens but the odds are totally against you finding a star amongst the flood of resumes you’ve received.

If you can find a decent head hunter (“Recruiting Consultant”) that is willing to work with a startup, then I highly recommend using one. They will sort thru the resumes for you and instead of getting two hundred resumes, you may get fifty. The other benefit to using a good recruiter is that they will make sure the candidate actually shows up for the interview.

Dealing with Recruiters

Recruiters will typically take a month’s salary for “freshers” or mid-level candidates and they can take up to twenty percent of the total package for a senior candidate. Everything is negotiable so don’t hesitate in negotiating these fees. One recruiter I worked with started with sixteen percent of the total package or CTC (“Cost to Company”) paid within one month of the person being hired and they finally settled on one month’s salary being paid every quarter over the first year of the candidate’s employment. Recruiters are notorious for placing a person and then recruiting them for another job within three months. This was my insurance policy against the recruiter farming my employees, at least for the first year of their employment.

The flip side to working out a deal so favorable to you is that many recruiters will weigh the opportunity cost of working with you under conditions like this and as the market picks up, they will instead focus on the companies that will give the recruiter more favorable terms like full payment within thirty days of the candidate being hired. If you’re doing a high volume of hires this problem can be mitigated. Unfortunately most startups don’t hire twenty or thirty people in their first year in India unless their a service company and have positive cash flow very quickly.

Miscellaneous Pitfalls

“I’m two hours late to the interview because of traffic”

I’ve had quite a few candidates either show up more than two hours late for an interview or not show up at all. Traffic being the most often used excuse. The truth is, Indians don’t really respect time and this shows in all aspects of day to day life. Don’t take it personally. It happens more often than not so it’s nothing about you or your startup. Forget about it and move onto the next one. One thing that may make you feel like you’re not wasting your time is to schedule two or three candidates to come in at the same time and interview them on a first come, first serve basis. I wouldn’t dream of doing this in the US but in India, it’s the most productive and completely acceptable way of working.

The Employee’s Blank Stare

I had hired a designer who talked the talk really well. I’m not a designer but he sounded good. I hired him and he started work on a Monday. Wednesday morning, his mother called in sick for him. The following Monday, I had to fire him for spending too much time on IM with his wife, looking for another job while sitting two feet away from me and also downloading other people’s designs and logos off the web and passing them on as his own ideas. In the hour and a half “discussion” we had, rather than apologizing for the things he was blatantly doing wrong, all I got was the blank stare. It was my first experience with this sort of thing. Had I gotten a “I’m sorry about that and my problem is …..”, I probably would have given him another chance, while keeping a very close eye on him. I’m still not quite sure what the blank stare is for but in hindsight, I’m assuming it’s an apology without admission of guilt. Much like most settlements with the SEC.

Asides

Design, image, graphic theft is a very common issue in India. Many “designers” are really just PhotoShop jocks taking other people’s work so keep an eye out for this and encourage fresh ideas.

Many new developers suffer from the copy and paste syndrome so try to encourage them to write their own code hence, developing their skills as programmers, and limiting any sort of legal and other liabilities.

Firing people in India isn’t so clean cut so, I’d advise you to look into some of the laws related to Hiring and Firing in India.

“I want my own startup but I don’t want your stinkin’ Equity”

Conserving cash and giving options or equity to employees in India can be tough. Very few 20-somethings will opt for more options than cash. The reason is pretty simple. A check every month going into their bank account that they can show to their parents, grandparents, extended family, significant others and potential marriage proposals goes a lot further than showing off a share certificate. Budget for paying salaries instead of very low salaries and some equity options (“ESOPS”). You may wind up giving the employee some options later on, if they stick around for some time or if you sell the company or go public but for various sociological reasons, “cash is king” so save the equity for those who really value it.

I would love to hear some of your stories and comments. What do you think? Drop in a comment below with your thoughts.

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3 Replies to “Five-ish Team Building Pitfalls Faced By Startups in India”

  1. I can totally relate to your experience. Starting a startup in India is no easy task.

    Besides hiring talent for your company, there are many un-wanted challenges like lack of infrastructure, power cuts and poor internet connectivity. How do an entrepreneur start an Internet business without Internet and electricity. Entrepreneurs in metro cities like Delhi or Mumbai with around $10,000 – $20,000 in start up capital can over come these issues.

    But for an entrepreneur in a tier 2 city of India, situation is much worse.

    I have met many NRIs who come to India to start their startup, but they have little success because of the problems you mentioned in your post. Slideshare is the only exception I can think of.

    Why do they come to India to start a startup? Is there any advantage in India over Silicon Valley?

    I believe most NRIs come to India in hope of building a cheap talented team. Talented developers are rare in India, and they don’t want to work for a startup. Founders developing the product in their apartment is probably the most efficient way to get the product ready. But they can do it in US as well.

    1. Ravish,

      Good points, however, in my experience, the NRIs and expats that I’ve encountered came to India to setup business that focused on India, myself included. What has drawn many of us to India is a chance to reconnect with our roots, be a part of all the changes happening in India, and also, the potential market size. Building a “cheap talented team”, doesn’t work in the Indian context. Talented techies and business people in India aren’t cheap. They may be slightly cheaper than their counterparts in Silicon Valley or NYC but that’s limited to cost of living differences. Good talent in India is pretty expensive.

      Slideshare is more akin to the typical MNC and early US Web 2.0 startups like riya.com (like.com) that decided to setup shop in India for purely cheap labor reasons. The MNCs have managed to throw money at the problem but most startups have failed because they weren’t looking at the Indian market.

      I think what helped Slideshare was their marketing of their business to Indians as being an Indian startup and not a US startup. However, I agree with you that in today’s age, unless you are focusing a large part or all of your business in India, there is no good reason to setup a “cheap” development center in India.

      Best,
      Pankaj

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