FlipKart: Owned 80% By Investors

I learned today that FlipKart is owned 80% by investors. That is a sad state of affairs. Investors should have the discipline to not own 35-40% of a tech startup, otherwise you are killing the hen that lays the golden egg. It is racism to think Indian tech startup founders can get by with little ownership because, well, they are Indian and they are in India.

I wish FlipKart all the best, but I can't see how a tech startup that is so weak at its foundation can be a trailblazer. It has been set to fall, if not now then later. The ownership structure is bull.

Rahul Yadav is another story that caught my attention months ago. The Indian media made it look like the guy sent out one wrong, arrogant email and that is why. That is missing the point. He had all the inklings of a tech startup founder. But the ownership structure there also was all messed up. And I gather Housing.com has bombed since. The hen got killed.

The Real Rahul Yadav Story
Rahul Yadav Has A Bright Future

I hope there will be a second coming of Rahul Yadav just like there was a second coming of Steve Jobs.

If FlipKart is owned 80% by investors, I am not sure it is the Indian Alibaba.

Saudi Arabia: SuperPower?

A tech startup founder is not a CEO. A tech startup founder has to be in a commanding position. Because you have to make drastic moves as you grow. And you need power to be able to make those moves. And the power comes from equity ownership. I don't know what the FlipKart investors are thinking.

A company owned 80% by investors, when it goes for its next round of funding, the investors will make the call. The founder CEO will not be at the negotiating table. That should never happen. An irrelevant founder CEO is not a founder CEO but an employee.



Tech Startup Equity Distribution
Zuck, Free Basics, India
Zuck, Free Basics, India (2)
Dorsey Ouster Was DNA Damage At Twitter

There is venture capital. And then there is vulture capital.

How Companies Get Valuated

I don't know a whole lot on the topic. I have a broad idea. I get the concepts. But I have not bothered to master the details. There are too many versions, too many ways they get done. Android is not fragmented, what is really screwed up and fragmented is how companies get valued.

How companies get valuated reminds me of when they taught me several pre-Charles Darwin theories of evolution at high school. They were all over the place. They all lacked the basic beauty of Darwin's theory of evolution.

Paul Graham: Y Combinator

Y Combinator

"If you want ideas for startups, one of the most valuable things you could do is find a middle-sized non-technology company and spend a couple weeks just watching what they do with computers. Most good hackers have no more idea of the horrors perpetrated in these places than rich Americans do of what goes on in Brazilian slums."

"Once you've got a company set up, it may seem presumptuous to go knocking on the doors of rich people and asking them to invest tens of thousands of dollars in something that is really just a bunch of guys with some ideas. But when you look at it from the rich people's point of view, the picture is more encouraging. Most rich people are looking for good investments. If you really think you have a chance of succeeding, you're doing them a favor by letting them invest. Mixed with any annoyance they might feel about being approached will be the thought: are these guys the next Google?"

"You have more leverage negotiating with VCs than you realize. The reason is other VCs. I know a number of VCs now, and when you talk to them you realize that it's a seller's market. Even now there is too much money chasing too few good deals.....A few steps down from the top you're basically talking to bankers who've picked up a few new vocabulary words from reading Wired. (Does your product use XML?) So I'd advise you to be skeptical about claims of experience and connections. Basically, a VC is a source of money. I'd be inclined to go with whoever offered the most money the soonest with the least strings attached..... The most efficient way to reach VCs, especially if you only want them to know about you and don't want their money, is at the conferences that are occasionally organized for startups to present to them."

"Google is again a case in point. When they appeared it seemed as if search was a mature market, dominated by big players who'd spent millions to build their brands: Yahoo, Lycos, Excite, Infoseek, Altavista, Inktomi. Surely 1998 was a little late to arrive at the party."

"At sales I was not very good. I was persistent, but I didn't have the smoothness of a good salesman. My message to potential customers was: you'd be stupid not to sell online, and if you sell online you'd be stupid to use anyone else's software. Both statements were true, but that's not the way to convince people."

"There is nothing more valuable, in the early stages of a startup, than smart users. If you listen to them, they'll tell you exactly how to make a winning product. And not only will they give you this advice for free, they'll pay you."

"The other reason to spend money slowly is to encourage a culture of cheapness."

"An apartment is also the right kind of place for developing software.... I'd advise most startups to avoid corporate space at first and just rent an apartment. You want to live at the office in a startup, so why not have a place designed to be lived in as your office? .... Besides being cheaper and better to work in, apartments tend to be in better locations than office buildings. And for a startup location is very important. The key to productivity is for people to come back to work after dinner. Those hours after the phone stops ringing are by far the best for getting work done."


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