After reading this book, I started seeing the patterns about Israel being high tech hotspot, for example consider just two pieces of news in the last 3-4 days: Apple buying Anobit, an Israeli company, for $500 million as well as building a research center in Israel and Cornell won the bid to build a university in New York city… in collaboration with Technion university of Israel.

What is important

This book taught me the importance and inter-play of:

• Entrepreneurism
• Venture capital
• Being committed to own business and country at same time
• When people are pushed for survival, only then do they show the zeal for entrepreneurism and trade – otherwise nation becomes lazy
• Size of country does matter
• Government policies
  • For example, the world’s richest man has to go to a different country to develop new nuclear energy technology.
• Immigration
• Technology as future growth
• Multiple fields learning
• Defense Forces
• Liberalization and freedom of speech

To highlight in a bit more detail, I have picked a few quotes and insights from each chapter:

0. Introduction

• Story of Shimon Peres and Shai Agassi pitching Better Place to auto manufacturers – Better Place is re-thinking electric vehicles by making fuel stations swap out your battery with a charged one instead of pumping petrol or diesel into the car, highly ambitious, executed first in Israel, now in China, etc.

1. Persistence

• Story of "Fraud Sciences" company pitching to Paypal to use their fraud detection service – Paypal ended up buying them so that the competition doesn’t get them – idea came from founders who were soldiers in the Israeli army hunting down terrorists – they found hunting frauds easier.
• Chutzpah
• Israeli attitude and informality flow also from a cultural tolerance for what some Israelis call "constructive failure" or "intelligent failures." Most local investors believe that without tolerating a large number of failures, it is impossible to achieve true innovation. In the Israeli military, there is a tendency to treat all performance – both successful and unsuccessful – in training and simulations, and sometimes even in battle, as value-neutral. So long as the risk was taken intelligently, and not recklessly, there is something to be learned.
• Story of how Intel’s chip design vision changed purely because of doggedness of the Israeli Intel office to convince higher-ups and how that eventually saved the company

2. Battlefield Entrepreneurs

• As usual in the Israeli military, the tactical innovation came from bottom up – from individual tank commanders and their officers. It probably never occurred to these soldiers that they should ask their higher-ups to solve the problem, or that they might not have the authority to act on their own. Nor did they see anything strange in their taking responsibility for inventing, adopting, and disseminating new tactics in real time, on the fly. Yet what these soldiers were doing was strange. If they had been working in a multinational company…
• Company commander is also the lowest rank that must take responsibility for a territory. As Farhi puts it, "If a terrorist infiltrates that area, there’s a company commander whose name is on it. Tell me how many twenty-three-year-olds elsewhere in the world live with that kind of pressure… How many of their peers in their junior colleges have been tested in such a way? How do you train and mature a twenty-year-old to shoulder such responsibility?
• In the Israel Defence Forces (IDF), there are even extremely unconventional ways to challenge senior officers. "I was in Israeli army units where we threw out the officers," Oren told us, "where people just got together and voted them out. I witnessed this twice personally. I actually liked the guy, but I was outvoted. They voted out a colonel." When we asked Oren in disbelief how this worked, he explained, "You go and say, ‘We don’t want you. You’re not good.’ I mean, everyone’s ona first-name basis… You go to the person above him and say, ‘That guy’s got to go.’… It’s much more performance-oriented than it is about rank.

3. The People of The Book

• Almost every Israeli trekker in Bolivia is likely to come through El Lobo (restaurant), but not just to get food that tastes like it’s from home, to speak Hebrew, and to meet other Israelis. They know they will find something else there, something even more valuable: the Book. Though spoken of in singular, the Book is not one book but an amorphous and evolving collection of journals, dispersed throughout some of the most remote locations in the world. Each journal is a handwritten "Bible" of advice from one traveler to another. And while the Book is no longer exclusively Israeli, its authors and readers tend to be from Israel.
• Israeli wanderlust is not only about seeing the world; its sources are deeper… there is another psychological factor at work – a reaction to the physical and diplomatic isolation. Until recently, Israelis could not travel to a single neighbouring country…
• For the same reason, it was natural for Israelis to embrace the Internet, software, computer, and telecommunications arenas. In these industries, borders, distances, and shipping costs are practically irrelevant. As Israeli venture capitalist Orna Berry told us, "High-tech telecommunications became a national sport to help us defend against the claustrophobia that is life in a small country surrounded by enemies." … "Today, Israeli companies are firmly integrated into the economies of China, India, and Latin America. Because, as Orna Berry says, telecommunications became an early priority for Israel, every major telephone company in China relies on Israeli telecom equipment and software…

4. Harvard, Princeton and Yale

• Innovation often depends on having a different perspective. Perspective comes from experience. Real experience also typically comes with age or maturity. But in Israel, you get experience, perspective, and maturity at a younger age, because the society jams so many transformative experiences into Israelis when they’re barely out of high school. By the time they get to college, their heads are in a different place than those of their American counterparts… In the military, you’re in an environment when you have to think on your feet. You have to make life-and-death decisions. You learn about discipline. You learn about training your mind to do things, especially if you’re frontline or you’re doing something operational. And that can only be good and useful in the business world… This maturity is especially powerful when mixed with an almost childish impatience.
• When an Israeli man wants to date a woman, he asks her out that night. When an Israeli entrepreneur has a business idea, he will start it that week. The notion that one should accumulate credentials before launching a venture simply does not exist. This is actually good in business. Too much time can only teach you what can go wrong, not what could be transformative.
• The military gets you at a young age and teaches you that when you are in charge of something, you are responsible for everything that happens… and everything that does not happen," Lowry told us. "The phrase ‘It was not my fault’ does not exist in the military culture.

5. Where Order Meets Chaos

• Although Singapore’s military is modeled after the IDF – the testing ground for many of Israel’s entrepreneurs – the "Asian Tiger" has failed to incubate start-ups. Why?
• There is a can-do, responsible attitude that Israelis refer to as rosh gadol. In the Israeli army, soldiers are divided into those who think with a "rosh gadol" – literally, a "big head" – and those who operate with a rosh katan, or "little head." Rosh katan behavior , which is shunned, means interpreting orders as narrowly as possible to avoid taking on responsibility or extra work. Rosh gadol thinking means following orders but doing so in the best possible way, using judgment, and investing whatever effort is necessary. It emphasizes improvisation over discipline, and challenging the chief over respect for hierarchy. Indeed, "challenge the chief" is an injunction issued to junior Israeli soldiers, one that comes directly from a postwar military commission that we’ll look at later. But everything about Singapore runs counter to a rosh gadol mentality.
• In Israeli’s elite military units, each day is an experiment. And each day ends with a grueling session whereby everyone in the unit – of all ranks – sits down to deconstruct the day, no matter what else is happening on the battlefield or around the world. "The debrief is important as the drill or live battle," he told us. Each flight exercise, simulation, and real operation is treated like laboratory work "to be examined and reexamined, and reexamined again, open to new information, and subjected to rich – and heated debate. That’s how we are trained." In these group debriefs, emphasis is put not only on unrestrained candor but on self-criticism as a means of having everyone – peers, subordinates, and superiors – learn from every mistake. "It’s usually ninety minutes. It’s with everybody. It’s very personal. It’s a very tough experience," Dotan said, recalling the most sweat-inducing debriefings of his military career. "The guys that got ‘killed’ [in the simulations], for them it’s very tough. But for those who survive a battle – even a daily training exercise – the next-toughest part is the debriefing." …
• Finally, Eiland leveled a criticism that is perhaps quintessentially Israeli and hardly imaginable within any other military apparatus: "One of the problems of the Second Lebanon War was the exaggerated adherence of senior officers to the chief of staff’s decisions. There is no question that the final word rests with the chief of staff, and once decisions have been made, all must demonstrate cmplete commitment to their implementation. However, it is the senior officer’s job to argue with the chief of staff when they feel he is wrong, and this should be done assertively on the basis of professional truth as they see it.
• Large organizations, whether military or corporate, must be constantly wary of kowtowing and groupthink, or the entire apparatus can rush headlong into terrible mistakes. Yet most militaries, and many corporations, seem willing to sacrifice flexibility for discipline, initiative for organization, and innovation for predictability. This, at least in principle, is not the Israeli way.

6. An Industrial Policy That Worked

• The history of Israel’s economy is one of two great leaps, separated by a period of stagnation and hyperflation. The government’s macroeconomic policies have played an important role in speeding the country’s growth, then reversing it, and then unleashing it in ways that even the government never expected.

7. Immigration

• Israel’s economic miracle is due as much to immigration as to anything. At Israel’s founding in 1948, its population was 806,000. Today numbering 7.1 million people, the country has grown almost ninefold in sixty years. The population doubled in the first three years alone, completely overwhelming the new government. As one parliament member said at the time, if they had been working with a plan, they never would have absorbed so many people. Foreign-born citizens of Israel currently account for over one-third of the nation’s population, almost three times the ratio of foreigners to natives inthe United States… Israel is now home to more than seventy different nationalities and cultures.
• Ask yourself, why is it happening here?" he said of the Israeli tech boom. We were sitting in a trendy Jerusalem restaurant he owns, next to a complex he built that houses his venture fund and a stable of start-ups. "Why is it happening on the East Coast or the West Coast of the United States?" A lot of it has to do with immigrant societies. In France, if you are from a very established family, and you work in an established pharmaceutical company, for example, and you have a big office and perks and a secretary and all that, would you get up and leave and risk everything to create something new? You wouldn’t. You’re too comfortable. But if you’re an immigrant in a new place, and you’re poor," Margalit continued, "or you were once rich and your family was stripped of its wealth – then you have drive. You don’t see what you’ve got to lose; you see what you could win. That’s the attitude we have here – across the entire population.
• Crucially, Israel maybe the only country that seeks to increase immigration, not just of people of narrowly defined origins or economic status… the job of welcoming and encouraging immigration is a cabinet position with a dedicated ministry behind it. Unlike the U.S. Citizenship and Immigration Service, which maintains as one of its primary responsibilities keeping immigrants out, the Israeli Immigration and Absorption Ministry is solely focused on bringing them in.
• In the beginning of the 1960s, Romanian dictator Nicolae Ceausescu demanded hard cash to allow Jews to leave the country. Between 1968 and 1989, the Israeli government paid Ceausescu $112,498,800 for the freedom of 40,577 Jews. That comes out to $2,772 per person.

8. The Diaspora

• AnnaLee Saxenian is an economic geographer at U.C.Berkeley and author of The New Argonauts. "Like the Greeks who sailed with Jason in search of the Golden Fleece," Saxenian writes, "the new Argonauts [are] foreign-born, technically skilled entrepreneurs who travel back and forth between Silicon Valley and their home countries." She points out that the growing tech sectors in China, India, Taiwan, and Israel – particularly the last two countries – have emerged as "important global centers of innovation" whose output "exceeded that of larger and wealthier nations like Germany and France." She contends that the pioneers of these profound transformations are people who "marinated in the Silicon Valley culture and learned it. This really begain in the late ’80s for the Israelis and Taiwanese, and not unil the late ’90s or even the beginning of the ’00s for the Indians and Chinese.
• The new Argonaut, or "brain circulation," model of Israelis going abroad and returning to Israel is one important part of the innovation ecosystem linking Israel and the Diaspora.
• Peres (in the Israeli Defense Ministry) had tried to buy thirty surplus Mustang aircraft for the Israeli Air Force, but the United States had decided to destroy the planes instead. Their wings were sliced off and their fuselages cut in two. So Schwimmer (one of the non-Israeli Jewish Diaspora)’s team bought the cut-up planes at cost from a Texas junk dealer, reconstructed them, and made sure they had all their parts and were operational. Then the team disassembled the planes again, packed them in crates marked "Irrigation Equipment," and shipped them to Israel.

9. The Buffett Test

• No sooner did the richest man in the world leave Israel than the second-richest, Warren Buffett, showed up. The most revered investor in America had arrived to visit the first company he’d bought outside the United States… Iscar, the Israeli company Buffett bought, has its main factory and R&D facilities in the northern part of Israel and was twice threatened by missile attacks – in 1991, when the whole country was targeted by Iraq’s Saddam Hussein during the Gulf War, and during the 2006 Lebanon War, when Hezbollah fired thousands of missiles at Israel’s northern towns. "Doesn’t this constitute catastrophic risk?" we asked Alice Schroeder, the only authorized biographer of Warren Buffett. Buffett’s view, she told us, is that if Iscar’s facilities are bombed, it can go build another plant. The plant does not represent the value of the company. It is the talent of the employees and management, the international base of loyal customers, and the brand that constitute Iscar’s value. So missiles, even if they can destroy factories, do not, in Buffett’s eyes, represent catastrophic risk.
• During the 2006 Lebanon War, just two months after Buffett acquired Iscar, 4228 miles landed in Israel’s north. Located less than eight miles from the Lebanese border, Iscar was a prime target for rocket fire… One rocket did slam into Tefen Industrial Park and a slew of rockets landed nearby. And though, during the war, many workers did temporarily relocate, with their families, to the southern part of the country, Iscar’s customers would never have known it. "It took us a brief time to adjust, but we didn’t miss a single shipment," Wertheimer said. "For our customers around the world, there was no war.

10. Yozma

• Every year when I tried to review the success of these small companies, it was disappointing," said Erlich. "While they may have succeeded in R&D, we didn’t see them succeed in growing companies." He became convinced that a private venture capital industry was the only antidote. But he also knew that in order to succeed, an Israeli VC industry would need strong ties with foreign financial markets. The international connections were not just about raising funds; aspiring Israeli VCs needed to be mentored in the art of business mentoring. There were thousands of venture capital firms in the United States that were involved in the nuts and bolts of successful tech start-ups in Silicon Valley. They had experience building companies, understood the technology and the funding process, and could guide first-time entrepreneurs. That’s what Erlich wanted to bring to Israel.
• That’s when a band of young bureaucrats at the Ministry of Finance came up with the idea for a program they called Yozma, which in Hebrew means "initiative." The idea was for the government to invest $100 million to create ten new venture capital funds. Each fund had to be represented by three parties: Israeli venture capitalists in training, a foreign venture capital firm, and an Israeli investment company or bank.
• The real allure for foreign VCs, however, was the potential upside built into this program. The government would retain a 40 percent equity stake in the new fund but would offer the partners the option to cheaply buy out the quity stake – plus annual interest – after five years, if the fund was successful. This meant that while the government shared the risk, it offered investors all of the reward. From an investor’s perspective, it was an unusually good deal.
• The ten Yozma funds created between 1992 and 1997 raised just over $200 million with the help of government funding. Those funds were bought out or privatized within five years, and today they manage nearly $3 billion of capital and support hundreds of new Israeli companies. The results were clear. AS Erel Margalit put it, "Venture capital was the match that sparked the fire."

11. Betrayal and Opportunity

• Like many small states, Israel preferred to buy large weapon systems from other countries, rather than devote the tremendous resources needed to produce them. [Especially from France. In 1969, France changed loyalties opting for rapprochement with the Arab world.] The Israelis quickly pursued stopgap measures. Israel decided that it must move quickly to produce major weapons systems, such as tanks and fighter aircraft, even though no other small country had successfully done so.
• The most ambitious project of all was the Lavi fighter jet, using American-made engines. [Even though the project was eventually cancelled], the Israelis had made an important psychological breakthrough: they had demonstrated to themselves, their allies and their adversaries that they were not dependent on anyone else to provide one of the most basic elements for national survival – an advanced fighter aircraft program. Second, in 1988 Israel joined a club of only about a dozen nations that had launched satellites into space – an achievement that would have been unlikely without the technological know-how accumulated during the Lavi’s development. And third, it helped jump-start the high-tech boom to come. Yossi Gross, one of the Lavi’s engineers, went on to found seventeen start-ups and develop over three hundred patents.

12. From Nose Cones to Geysers

• The companies where mashups are most common in Israel are in the medical-device and biotech sectors, where you find wind tunnel engineers and doctors collaborating on a credit card-sized device that may make injections obsolete. Or you find a company that has created an implantable artificial pancreas to treat diabetes. And then there’s a start-up that’s built around a pill that can transmit images from inside your intestines using optics technology taken from a missile’s nose cone.
• Some of Gross’s companies combine such wildly diverse technologies that they border on science fiction. Beta-O₂, for example, is a startup working on implantable "bioreactor" to replace the defective pancreas in diabetes patients. Diabetics suffer from a disorder that causes their beta cells to cease producing insulin. Transplanted beta cells could do the trick, but even if the body didn’t reject them, they cannot survive without a supply of oxygen. Gross’s solution was to create a self-contained micro-environment that includes oxygen-producing algae from the geysers of Yellowstone Park. Since the algae need light to survive, a fiber-optic light source is included in the pacemaker-sized device. The beta cells consume oxygen and produce carbon dioxide; the algae does just the opposite, created a self-contained miniature ecosystem. The whole bioreactor is designed to be implanted under the skin in a fifteen-minute outpatient procedure and replaced once a year.

13. The Sheikh’s Dilemma

• Cultural commitment can be central to the success of economic clusters, of which Israel’s high-tech industry is a case in point. A cluster, as described by the author of the concept, Harvard Business School professor Michael Porter, is a unique model for economic development because it’s based on "geographic concentrations" of interconnected institutions – businesses, government agencies, universities – in a specific field. Clusters produce exponential growth for their communities because people living and working within the cluster are in some way connected to each other. As Porter says, the "social glue" that binds a cluster together also facilitates access to critical information. A cluster, he notes, must be built around "personal relationships, face-to-face contact, a sense of common interest and ‘inside’ status." Margalit would point out that Israel has just the right mix of conditions to produce a cluster of this kind – and that’s rare. After all, attempts to create clusters don’t always succeed. Take, for example, Dubai.
• Attracting new members to a cluster by offering a less expensive way to do business might be sufficient to create a cluster, but not to sustain it. If price is a cluster’s only competitive edge, some other country will always come along to do it more cheaply. The other qualitative elements – such as tight-knit communities whose members are committed to living and working and raising families in the cluster – are what contribute to sustainable growth. Crucially, a cluster’s sense of shared commitment and destiny, which transcends day-to-day business rivalries, is not easy to manufacture.

14. Threats to the Economic Miracle

• What if Israel’s economic miracle were simply built on a rare confluence of events and would disappear under less favorable circumstances? Even if Israel’s new economy is not just the product of happenstance, what are the real threats to Israel’s long-term economic success?
• A diminished supply of venture capital dollars [in view of the worldwide economic crisis] could mean less "innovation finance" for Israel’s economy.
• The problem according to Ben-David, is that while the tech sector has been surging ahead, and becoming more productive, the rest of the economy has not been keeping up.
• As the New York Times’ Thomas Friedman put it, "I would much rather have Israel’s problems, which are mostly financial, mostly about governance, and mostly about infrastructure, rather than Singapore’s problem because Singapore’s problem is culture-bound.

15. Conclusion

• In twenty-five years, Israel increased its agricultural yields seventeen times. This is amazing," Peres told us. "People don’t realize this," Peres said, "but agriculture is ninety-five percent science, five percent work."
• Peres seemed to see technology everywhere, and long before Israelis themselves thought in such terms. This may have beeno ne of the reasons Ben-Gurion backed Peres so strongly; the "Old Man" was also fascinated by technology, he told us. "Ben-Gurion thought the future was science. He would always say that in the army it’s not enough to be up to date; you have to be up to tomorrow," Peres recalled.
• What makes the current Israeli blend so powerful is that it is a mashup of the founders’ patriotism, drive and constant consciousness of scarcity and adversity and the curiosity and restlessness that have deep roots in Israeli and Jewish history. "The greatest contribution of the Jewish people in history is dissatisfaction," Peres explained. "That’s poor for politics but good for science."
• This theme can be traced to the very idea of Israel’s founding. The modern state’s founders – or national entrepreneurs – were building what might be called the first "start-up nation" in history.
• At eighty-five, Peres still has the chutzpah to think up and advocate new industries. As they do in Israeli society, the pioneering and innovative impulses merge into one. At the heart of this combined impulse is an instinctive understanding that the challenge facing every developed country in the twenty-first century is to become an idea factory, which includes both generating ideas at home and taking advantage of ideas generated elsewhere. Israel is one of the world’s foremost idea factories, and provides clues for the meta-ideas of the future. The most careful thing, as Peres told us, is to dare.

Summary

This book has been instrumental in illuminating my mind about nation-building, about why startups are essential to a nation’s survival going forward and how much of a role the ecosystem plays.

I have been liberal in taking quotes from the book, but believe me, I haven’t even covered half the book in these quotes, so please do go read the book now!

I have to mention a special thanks to Sameer Guglani for recommending this book to me. I can already see that the "Morpheus gang" has the seeds of a cluster.

Update on 29-Dec-2011: See this article on why one VC has the opinion that Chile is not a great startup place – the interesting part is how culture of the country plays a big role in the entrepreneurialism of its residents.

Update on 12-Jan-2012: Many more hubs being kickstarted and hope to thrive : Las Vegas ‘Downtown Project’, Startup Chile, Tech City in East London.

Update on 22-Jan-2012: A very interested article by New York Times titled “How U.S. Lost Out on iPhone Work – Apple, America and a Squeezed Middle Class”.

Eventually, I signed up for it. Of course, I have never mentioned this before to anybody other than a handful of friends because most people would balk that I paid so much for an online course and consider me an idiot. I guess I’m just not the latte saving kind of guy – I don’t earn a lot and I don’t spend a lot, but I do want to spend on the things that I really want. I’m mentioning this today because I have results to show from having gone through just half of the course.

A few months ago after I left my last job, most people expected me to jump into a startup again:

Having the spent last 3 years in startup land, I learned a few things which have made me wary and weary of startups. It had gotten me to think of what it is that I was actually seeking.

It turns out to be simple – “I like coding. I like building interesting and meaningful projects. I like working with good people. I like getting paid well.” That’s it . After all these years, I still love coding, so I kept thinking of ways to focus on just that and stay far away from the business and management side of things. “At least, let me indulge in coding till I have the enthusiasm for it” was my refrain. But how to achieve that?

That was when my lessons from Earn1K kicked in.

Today, my full-time freelancing is going better than I had anticipated a couple of months ago.

There was one more reason why freelancing seemed like a great option to me:

To be happy, your work must fulfill three universal psychological needs:

1. Autonomy – control over how you fill your time.
2. Competence – mastering unambiguously useful things
3. Relatedness – feeling of connection to others

This was what I came across in Cal Newport’s blog whom I pay attention to.

As you can imagine, freelancing has given me an opportunity to further each of the above three points – I get to choose the projects I work on, I get to choose projects that improves my skills and I get to choose to work on projects that I want to be a part of. I am not bound by a company’s roadmap at all.

There are other pluses such as not having to commute, not having to take phone screens and face-to-face interviews, no meetings, not having to worry about sales and product roadmap (my clients take care of that), not having to worry about the competition (my clients take care of that), etc.

There are minuses, of course, such as not having a team to interact and learn from, not having the opportunity to meet wonderful colleagues, no paid holidays, and so on. Thankfully, Pomodoro and GTD help me stay focused and productive and the other minuses haven’t bitten me strongly yet.

At some arbitrary point in time in the future, I’ll do a personal review of how things stand, especially if I have a reasonably steady income. If all is well, then I’ll probably continue freelancing, otherwise there is always the option to jump back into a regular job. Until then, my new life experiment is in progress and so far, so good.

P.S. I’ll talk about my current projects in subsequent posts.

“The three most harmful addictions are heroin, carbohydrates, and a monthly salary.”

— Nassim Taleb

I’m going to miss working in this environment because I learned a lot about ecommerce and online buying in India. For example, I was surprised to know how much sales go up during Diwali (in hindsight, not so surprising, of course) and was surprised at the amount of online buying that happens from Tier II cities. Then there was the learning on the huge amount of logistics that happens – the part where the customer visits the website and clicks on the Buy button is just 1% of the total stuff that happens behind-the-scenes.

I am also thankful to Ajay and Infibeam for getting me into the Rails wagon, I’m finally starting to see the light. Learning a new language and framework from scratch to delivering a full ecommerce platform in 4–5 months was a fascinating experience. And soon, anyone can set up their own online store on top of Infibeam’s infrastructure.

Infibeam has done many things right, has many things to improve, and rumors say they may face many challenges in the future. All in all, that’s a good thing. Infibeam launched at the right time and is helping to grow ecommerce in India, and it will continue to do so.

But alas, it’s time for me to move on. I can haz plans.

Listening to Stand Up by The Prodigy

My line of argument is that the future is digital, and hence buying online is a natural consequence of that.

However, just saying that was not convincing enough. So I gathered some statistics as proof and to wow them:

• Apple iTunes is the largest music retailer in USA and has sold more than 10 billion legal songs as of Feb 2010
• Amazon is one of the largest book selling websites in the world and it now sells 105 ebooks for every 100 printed books it sells
• Netflix is a movie streaming company and accounts for 25% of North American Internet traffic
• Facebook is actually the largest photo sharing website in the world where the average user creates 90 pieces of content each month and 100 million photos uploaded per day / 6 billion photos uploaded each month

Closer to home:

• 55 million hits in 48 hours for Zindagi Milegi Na Dobara via mobile phones, facebook and youtube only, the killer part is that no TV ads were done as a deliberate marketing strategy
• Gujarat just voted via the Internet
• 20 million people watched IPL online
• Despite the super high costs, India has 9 million 3G users already
• Update: Less than 1% of India’s population uses 3G service. 0% used 3G a year ago and 30% will use it 4 years from now → 400 million new smartphones.
• Update 2: According to a McKinsey report titled ‘Internet matters: The Net’s sweeping impact on growth, jobs, and prosperity’, released at the e-G8 Forum held in Paris on May 24-25, 2011, internet contributed 5 per cent to the total gross domestic product (GDP) growth of India in the past five years compared with the average 3 per cent for BRIC (Brazil, Russia, India and China) economies. According to the report, companies are able to keep costs down, target customers better and bring goods and services to markets around the world much more easily. — AlooTechie

Then there always is the trump card of how ubiquitous online ticketing has become…

As you can see, digital is happening in India and with RBI reporting that 35% of transactions (and 88% of the total amount) were electronic and Cash on Delivery slowly happening, how far will ecommerce be behind?

How would you convince someone that the future is digital and that ecommerce will be big in India?

Ramjee says: “Bang on, This problem is very severe.”

Gowri says: “oh you could not have hit the nail on the head better!! We are a small, serious high technology company and find it really hard to get good people. First many don’t want to talk to no-brand-name companies. Even when we get to make offers, we end up losing so many because TCS or Wipro or IBM or Accenture gave them 20k more for a maintenance project where they will end up modifying 50 lines of code every 3 months. I feel like crying for them!”

Abhaya says: “Next time we meet, remind me to buy you a drink. I sometimes wish all the people in Startup ecosystem will stop exhorting people to start their own companies and instead join one of the several hundred around as a first step!”

Abdul Qabiz says: “We have been working hard, for last two years, to build a small team, with not much success. Also, hiring is relatively harder for startups in third-tier cities because good ones move to metros.”

These comments are actually the best part of writing a blog – getting to hear from other people knowledgeable on the subject and who are actually in the trenches. The various thoughts added by the community was so good that I thought it was best to summarize it in a new post for my own cognition:

Startups are not promising, yet

We all agree that hiring is an issue. But why is it so? I think the best articulation on the subject was by Manu J (summarized here, please read the original comment for his full thoughts):

1. Stock options have made money for people in Silicon Valley startups. What about in India? “How many makemytrip employees made it big? How many rediff employees?”

2. “Startups do nothing to differentiate themselves from the big corps. If you are offering just a market salary why would a good engineer work with you rather than a big corp which offers that and more?”

3. “Uninspiring work. Not to knock on any startups but some time back facebook clones were all the rage. Now it is groupon clones.”

4. “Lack of technical leadership: Lot of US startups and techies actively participate in the tech community. They usually have a tech blog where they write about scaling challenges, best practices, new products tested out etc. I have learned a lot from these type of posts. I have never found an indian startup which has a good tech blog. (Couple of indian startups do have people in them who are well known and contributed back for ex: you ) but as a company I’ve never seen an indian startup which contributes back to the tech community”

Regarding Point No. 2, Syamant adds:

“Perhaps you should consider non traditional working models as well as talent from outside bangalore who could work remotely. Also consider people who are experienced and have opted to not work fixed hours.”

And Anirudh adds:

“If someone’s good at what they do, they are most likely selling their skills to the highest bidder – namely google, microsoft, amazon, etc. The ones who are trying to work independently (like me) do it because of many reasons – one of them is that you get utmost power, control and authority. Working for a small startup offers neither.”

Regarding Point No. 4, Harish Mallipeddi adds:

“Great technical work & leadership – do not build yet another PHP/MySQL site. Is at least one of the founders, technically well accomplished and smart? If you built Google News and you quit Google to work on your next big idea, then I’m sure that would instill a lot of confidence about you in the minds of potential hires. But if you are completely unaccomplished yourself, then it’s going to be a hard sell”

As far as I know, Manu hits the nail here on the real problems – startups need to do a way better job of making the job look attractive on the strengths of a startup (technical leadership, technical growth, long-term pay-offs, flexibility of timings) rather than trying to compete with big companies on the strengths of big companies (salary, facilities, etc.)

Even things like liberal work-from-home options or double the number of leaves of a regular job can make startups more attractive, like Harish Mallipeddi said:

“Different work space/work culture – you could try renting some cheap office space near a beach in Goa. I’ve worked for Yahoo and I’ve seen Google’s offices – they all have swanky office spaces with free cafeterias. You cannot compete with them by renting out a third-grade office space in crowded Bangalore. Try something different. If you look at all the Valley startups, they don’t just sell you a job – they sell you a work lifestyle – ‘come work for us; this is the kind of work culture we have’ is always their pitch.”

Good Founders are rare, most are stingy

Pranay says:

I am an early career engineer, and I have seen many of my friends leave startup jobs to get into well-established company. Mostly because the startups seldom live up to the exciting work culture image they generally promise. Also, many of the founders are very stingy in terms of giving away equity. The general view is that, its not fun to be in a startup, unless you are the founders/co-founders.

Anirudh says:

“In India, developers are generally treated like crap. I’ve got tons of offers from ‘business’ guys who have a stupid idea and a little spare cash. They don’t understand technology – and more importantly – it’s limitations. Anyone with a little field experience will automatically be wary of such people.”

Maybe the situation could be different if the founders mentor the employees, as Ayush Jain puts it:

“People who do join startups are mostly the ones who are interested in entrepreneurship or starting up themselves. These people do it for the ownership, respect and the appreciation of being entrepreneurs. The biggest mistake founders do is to treat them like employees. Consider talking to people you wish to hire about stock options as they join, or give them some reason to feel proud as an entrepreneur. This would also add to their ownership of the work they do and you would see a visible difference in their attitude towards work. But most entrepreneurs find it difficult to share the ownership of the company with them and thats why they find themselves struggling.”

As “Have to be anonymous” says:

“The founders of the startups are in the attitude of “giving life and supporting a family” for a few people than “taking help from a techie” mindset. Even if they know an employee is not a beggar who has joined his company to help him succeed in a venture, the employer’s behavior seldom reflects they have acknowledged this fact. This could be seen right from giving appointment orders till making the employee cry for relieving letters. And it would be funny to note the same employer read about “brands”. Would they know customers are of two types, internal and external?

“Yes, I was working in startups, and have now finally decided settle down for the “big fish nets”. I am now one of the so called tier 1 company employees. Afterall, if the current project is over, the company would actively search in full swing to depute me on another project. I wont get a pink slip as fast as I would get in a “get-the-job-done-and-go-home” startups.”

Good Startup Hires are Rare

As Rams says:

“There are not that many startup-type techies out there. That’s the simple truth. I am going through my 3rd startup and the reality couldn’t be starker. No, they are not hiding under a rock.”

As Upasana says:

“I am going to have to disagree with several people – Ayush, Ashish (Pocha), etc. above stating founders are stingy. I know at least a dozen including myself willing to give away 10-20% equity + decent monthly cash for a solid hacker. From architects in Yahoo and Amazon, to 1-person IT consulting guys to 3-4 years experienced guys in IT Services company to guys working in a 6 year old American startup’s Indian devcenter – tried them all. You know what? They just cant take the risk! So I dont think badgering Founders for not being open to dole out equity is a good enough reason.

“We got some early employees using a fair equation where some wanted more monthly cash + low equity, others wanted low cash + high equity. The decision was left to them on which package they wanted. We found that one of the guys after working 2-3 months and finding out the real revenue/margin numbers himself wanted to reduce his salary for a higher equity.

“I think smart hackers should know their self worth and also the worth of what they are building. If what they are making is exciting and hard for them may be its worth a pay cut for 2 years with a possible equity upside potential? After all last few months are showing indications of a bright M&A future.”

Ecosystem

Let’s face it – our ecosystem and family mindsets are not ready yet, we know this one and I think these are the “growing pains” of any startup culture. As Gowri puts it:

“These people talk nicely about wanting challenging jobs and new technology and all that, but get lured by ‘social status’ of branded companies and few thousands more.

“I even had one guy who left our company because his future father-in-law did not like that he didn’t work for one the ‘large’ companies!

“One guy resigned because he could not get a good bank loan since the banks were looking for branded or large company employees.”

Geek Out

When I had mentioned that I wish there was a ‘geeks grooming culture’, then the irreverent Pramode C E pointed out that that was exactly his latest venture – and he seems to have had great results in just a month since he started:

I began my new venture of mentoring B.Tech completed students on August 25. The ideas was to take in motivated students, build up their FOSS skills by making them write code/solve problems full-time, and try to use whatever contacts I have with friends and former students in the FOSS community/industry to get them placed with companies who need capable programmers.

Learn more about this on the IC Software website.

The lack of skilled people is an open secret. As Rohit says:

“At a general level, what we see is a clear lack of skills fulfilling each role, be it engg, sales, marketing etc.

“For eg: when we look for an engg. to write features, we only seem to get folks who know to write code. Customer acquisition strategies which many speak about are mostly traditional and nothing innovative. Forget about finding folks who help us scale, there are probably handful of them in India who are already picked up Yahoos and the Googles or now Facebook.”

Let’s hope that Kiran Jonnalagadda and HasGeek can indeed bring these skilled people together and breed a culture of such skills.

Hiring Strategies

Regarding, good hiring strategies for startups, Sameer Guglani has written extensively on this subject on his blog – Hiring method that works, What to look for in startup interviews? and Early employees – Salary & Equity.

Bottom Line

Startups need to pitch why they are better than big companies, it is the same whether it is about the product or about hiring!

As Saurabh Narula puts it:

“As you point out in your statement, hiring for a startup is a lot different than hiring for big companies – attacking the different problem with same mindset often misleads people in the hiring process.”

This has been an enlightening discussion for me, thanks to all of those whom I’ve quoted here (and many whom I’ve not quoted for reasons of length of this article) for their thoughts on this subject

Update: More great insights by Manu J in the comments.

Update 2: See Ravi Mohan’s take on the same.

Update 3: See Stalk Ninja, a unique initiative to whet good students and get them involved with startups.

I ask this question because, in fact, it is HARD for startups in Bangalore to hire. The problem is of two extremes: The good folks you would want to hire either become entrepreneurs themselves (full of challenges) OR work for big money in big companies (may not have challenges, but feeds their social status). There seems to be no middle ground where people want to enjoy the work which is full of challenges and also have the stability of a salary and the promise of stocks.

Hiring has become almost impossible for startups – right from IIMB-incubated startups which have full of challenges and exposure to companies like Infibeam which does crores in revenue per year and pays market price salaries.

Where to find such good people?

• What happens to all those people who started startups via iAccelerator and Morpheus Ventures and did not succeed? Do they go into consulting or join a regular job?
• What happens to all the college students who talk enthusiastically about joining startups? What percentage of those students switch to chasing the money because of peer pressure? I’m told majority of students don’t end up joining a startup when they have a higher salary offer from a big company.
• Who are the kinds of people who go to events like DoctypeHTML5? Are they part of startups or are they part of big companies?

I really wish Pluggd.in would setup an anonymous/discreet matchmaking service between “startup-mindset coders” (the scarcity) with good startups (which seems to be in abundance these days, the irony!), i.e. focus on finding good people first, and then promote the available startup jobs.

Maybe the need of the hour for our startup ecosystem is hiring-for-startup events (“get people to get things done”) rather than startup events consisting of motivational speeches (“listen to high-level talk about how to get things done”).

Sometimes I think that what is missing in Bangalore (and in India, in general) is a hackerspace culture and a geeks grooming culture. Let’s hope HasGeek has something up their sleeves…

This is just a thought running in my head which I’m expressing it here – I’ve heard the “Why can’t I hire good people for my startup?” question so often in the past few months, almost on a daily basis these days, that I really needed to get this out of my head and type it out!

On the other hand, if you think hiring for startups in Bangalore is not really an issue, please do advise, many people I know would be interested to know how to go about it

P.S. I’m writing this while I’m listening to sessions at the NASSCOM Product Conclave and can’t help but wonder if all the topics discussed here are even possible without having the right people with you in your venture, after all, the founders can’t do everything by themselves

Note: This article was a result of a discussion with Ram of Metaome, a IIMB-incubated startup. They’re looking for good folks to join them, if you’re interested.

Update: Indus has a different take on this.

That’s a hard question. Especially because I’m always wary of using such an ambiguous term. And more so, when there are far more qualified people to answer out there.

Since I have been asked the question, I am jotting down my thoughts on the subject here (the usual disclaimers apply):

I think the question really is about how impactful can a person be, rather than this nebulous word called “innovative.” In fact, I hate the word “innovation”, because the focus should be about problem solving.

Innovation (regardless of its definition) is almost always the by-product of a successfully executed product. You don’t start by wanting to be innovative. You start by looking at interesting hard problems. You only end up being innovative. So, Solve the Problem first.

For example, I always find it amusing to see the feedback on isbn.net.in – people have said “It’s awesome! It’s wonderful!” I replied “It’s just a bunch of regexes!” … But it just goes to show that what matters is how much the user values it, not how it is implemented.

Now, back to topic: If you want to be able to attack interesting hard problems, then my honest opinion is that you need to keep this equation in mind:

Creativity x Organization = Impact – Scott Belsky at the 99% Conference

Regarding Creativity / Ideas:

1. “If you think you don’t have any good ideas, that’s because you don’t really have bad ideas. You get one good idea only after you get a hundred bad ideas.” — paraphrasing Seth Godin in his latest book Linchpin.
2. Frequent Inspiration helps. A lot. Keep reading Springwise, Yanko Design, Quirky everyday and you’ll be inspired to “innovate” as well.
3. Observe. “If you’re looking for problems to solve, you’re better off to be around real people whose problems can be solved via your trade (such as software).” — RWW article
4. Follow the Trends, such as Gartner Identifies the Top 10 Consumer Mobile Applications for 2012 and 10 Tech Trends for 2010 — Time , and more importantly the kinds of technology and products that are being created, follow those “cutting edge” technologies that we love to adore and wonder “Wow, how did they come up with this stuff?“

But you have to be careful when ideating, because it is very easy to get into “analysis paralysis”:

Another important thing is to not get so carried away by the shiny new things that you forget the basics:

Regarding Organization / Discipline

1. There is this guy in Adobe Bangalore office who is a “patent machine.” He files for a patent every two weeks. No kidding. And these weren’t only trivial ones either. What was his trick? He spent a dedicated half hour every single day on thinking up new ideas or solving problems. It’s as simple as that. This is called the Seinfeld “Unbroken Chain” philosophy.
2. Body and Mind need a predictable routine and that’s when it’s optimal. And once it has a routine, it is hard for the body and mind to accept any other way. That’s why smokers find it so hard to get out of their addiction, because body and mind is used to it and is craving for it. Same goes for coffee, same goes for writing code, same goes for creating new ideas. It is so ironic that discipline breeds creativity. It’s a truth that we don’t want to accept, because it makes us sound less “human”.
3. Don’t judge an idea to be good or bad until you have tried to manually solve it yourself once or prototyped it. After your first attempt at solving the problem, if you still feel good about it and feel that some pain point has been relieved, then it is a good idea. Take Jack Dorsey’s simple approach to creating as an example: draw out the idea, gauge the right timing, and iterate like mad.

To summarize:

1. Focus on the problem, not the solution. As Dave McClure says: “problem, not solution. customer, not technology. UX, not code. distribution, not PR. acq cost, not revenue projections.”
2. As Seth Godin would say, “Artists who ship” have the most impact. Read Linchpin to internalize it.
3. What is your impact? Can you qualify it? Can you quantify it? Measure it every month – Within 6 months, you will know whether you are “innovative.”

Update #1: Related Reading, as pointed out by Srikanth in the comments: The Discipline of Innovation by Peter Drucker. Looks like I keep reinventing what Drucker has already said.

Update #2: See 10 Laws of Productivity by Behance team.

The background is that they are working to improve the quality of education in the IS / CS departments. One of the ideas they identified was to work with in-industry programmers who can answer questions from students on the innumerable topics out there, from a practical point of view. Of course, GIYF would be your first response, but students who are just starting out need face time and guidance to make them comfortable, even if the answer is going to be “Check this URL.” Some of the kinds of questions you can expect are:

• How can I use the vi editor to edit my file?
• What is CouchDB?
• How can I compile my program better than typing javac myProgram.java?
• How can I use the Facebook OpenGraph API?

The only way for PESIT to make this happen is to get motivated in-industry programmers to spare some of their time to mentor students. And what better way is there than offer office space to startups who can work out of the PESIT campus and mentor students face-to-face right there!

Startups can also get access to clusters of hundreds of machines in the computer labs and even get interested students to work as interns with you!

If this sounds like an opportunity for your startup and an opportunity for you to improve the quality of CS education, then go ahead and write to Mr. Harihara Vinayakaram (visiting lecturer at PESIT) at nextgenerationbangalore [at] gmail.com with “Startup Student Mentor” in the subject line.

The truth is that my diction and hold of vocabulary of Kannada is at such a nadir now (thanks to never having the need to read Kannada), that I don’t think I’ll be going back for the books. I will definitely be going back for the good old Kannada movies though.

I’m just waiting for my copy of Venkata in Sankata, which was sold out at the store. That is one good Kannada comedy movie, thanks to Ramesh of course.

Heartfelt thanks to Thejesh for letting me know that such a store exists.

What I admire about places such as Total Kannada and The Egg Factory is that they’re not just enterprises, they are a result of labour of love (of Kannada and eggs respectively). And it shows.

I converted the content I had prepared into for-web-only slides for your perusal: