Punit Shah

Saturday we had a VC competition at the Boston Startup Leadership Program workshop. SLP members heard pitches from startups around Boston, signed "mock" term sheets and in turn presented thes to VC's from Bain, HTGC and NextView as if it were to LP's or an investment committee. The term sheet negotiations got heated but there was always a bit of humor to keep things in check.

Why do finance guys gravitate towards startups? Is it because of the allure for making it big and cashing out, or because finance jobs are primarily mundane and restrictive to creative thought? Fan Bi wrote an article a little over a year ago about how entrepreneurship is the new sexy. He also hailed from an Investment Finance career, but I want to dig a bit deeper into the emergence of Entrepreneurs from the Finance realm.

While I've always been called enterprising by those around me, I went to school to study finance and was pretty stoked to work my first I-Banking job. Even after I was in classes and working in investment banking and venture capital, I often found myself bored and unchallenged. I went on to meet a few other entrepreneurial folks and attempted a few new ideas. One of them really clicked and that was when I got sucked into startups with a constant itch to create something new. Over the last few years, I’ve found myself interacting with other people from the finance realm who have been exploring the startup scene as well.

Finance is a competitive field, and everyone’s constantly shooting to be the best; subsequently, recognition is also hard to come by. My presumption is the opportunity to be recognized is what draws many in and the media does a good job of highlighting the glory of it all. Most people are ok with the fact that entrepreneurship is hard work; it's definitely very similar to the 12+ hour workdays some of us have had in finance. I suspect there is also a desire to see the impact of one's work being useful. Working in financial institutions, your work is but one piece of an intricate 15,000 piece puzzle.

Maybe it's the opportunity for creative thought. Innovation and creativity in the finance field are often met with a brick wall commonly known as the SEC. Risk is always being mitigated in the finance field, while entrepreneurship is about taking more (but calculated) risks. Or maybe it’s the adrenaline rush from the uncontrollable risk? It seems the truly hungry entrepreneurs learn that it's not about mitigating numerical risk, but rather innovating on the odds or the actual method of calculating risk.

But do Finance guys make good entrepreneurs? (I should tread carefully here) They bring a handful of unique skills to the table, including business practicality, financial feasibility, and a keen eye on short term planning and execution. There are many occasions when a non-business minded entrepreneur starts up, but fails to pass the test of practicality and financial feasibility. A finance oriented entrepreneur can take off those yellow tinted glasses and ask questions about what resources it will take to orchestrate the creation of their venture. If there are hurdles anticipated (high cost, long time periods, investment, risk of adoption), they can translate this into a strategy to minimize the impact of the hurdle. This leads into the particular strength that Finance guys are focused on: execution and measurable outcomes; this can often help a startup to stay on a path and remain focused on accomplishing its goals.

I don't think we are as good with handling the vision of the company, as practicality often overshadows the thought process. There’s also rigorous goal setting in Finance with constant review and measurement, elements many bring with them into the entrepreneurship scene, but often struggle with in the startup realm. The dynamic nature of startups makes it near damn near impossible to benchmark and set expectations as deliverables are constantly changing – making it like trying to hit a moving target. Entrepreneurs also have to step outside the mold quite often and must be relentlessly resourceful. This can often be a chanellenge when Finance guys become accustomed to creating a logical path and not knowing how to reapproach challenges with creative options. If a financial model breaks, they won't try to find a new way to calculate, they'll forever go back tracking which cells broke apart.

From my perspective, I believe finance guys fall into startups for their tolerance of risk (read: what gets their adrenaline pumping) and the opportunity for creative output. My observation is that only the truly hungry and intelligent finance guys can survive in entrepreneurship and have the ability to deal with the dynamic variables of startup challenges. It’s important to provide caution to those seeking recognition as an understood benefit because this is entirely the wrong reason to pursue entrepreneurship and proves far less rewarding after much hard work is already put in.

When you run into finance guys or MBAs in a startup, what do you find has attracted them into entrepreneurship?

Prototyping - it's a skill that has time and again proven useful to conveying ideas and value both within large organizations and startups alike. Every startup should breath this to live and succeed in going to market! Prototyping allows stakeholders (colleagues, partners, employees, customers) envision the benefits of a proposed is a means to cost effectively develop an idea that is catered to the exact needs of the end user. For the purposes of this post, I’ll focus on three examples of how Prototyping has been utilized and the benefits in each case.

The Boston Startup Weekend Challenge 2009 was the birthplace of my current startup Zazu and kicked off a storm with is creation! Our idea was to create Jarvis from the movie Iron Man, specifically from this scene. I thought to myself ‘Why can’t we have Jarvis on our phone?’ I chatted with Marc at the event on some ideas of how to create a full-fledged product, but realized that we had only 48 hours to convey the value of it. While Marc hadn’t previously written a mobile application, he was familiar with the language used by Android and proceeded to create a hardcoded prototype.

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The prototype led us to win a whopping $16 from the competition, but the takeaway was in demonstrating to people how it was possible to create what we had envisioned. This bought us our earliest stakeholders, the community. This included fellow startup enthusiasts, the press, and the general buzz around our product idea. Without such a start, Zazu may not have had the momentum to have the community’s support that led us to get noticed by many partners we have today!

During the spring 2010 Husky Innovation Challenge we held an entire boot camp focused solely on prototyping. We chose to do this because students had to prove the value of their venture concepts to the judges and Audience. The boot camp focused on methods of cost effective prototyping for concepts around software, retail establishments and even hardware. We had Jim Shanahan (VP of Business Development,SynDevRx) and Michael Bourque (Organizer, BostonPHP) come in to share tips on tools such as Balsamiq, MockupsToGo.net, SnagIt, and Napkee, tools even my outsourced developers use today to show me their ideas!

At the HIC Demo Day, we had a handful of ventures, all demonstrating their products. Some of them were so wild in fact that one student dragged his dorm mattress and asked a female friend to simulate waking up with an in-ear alarm that doesn’t disturb your significant other! Other students used Powerpoint animations to demonstrate a working site while another team creating a unique hookah lounge simulated the environment with props in the corner of the hall. Anonymous judges in the crowd used these prototypes to ultimately award $5,000 to the teams with the best venture concepts!

I started the Modal Mobility project which was based on the simple idea of a product that had potential to the millions of smartphone users – I just had to show an example of the product and how it could be sold and distributed. I've advocated for the power of prototyping so many times in the past and found this an awesome opportunity to do it again in a well-documented manner. The concept was a belt holster for a user with multiple devices. The pain point was for users with multiple cell phones or the dreaded case of a corporate Blackberry and the beloved iPod Touch.

As you can see, this took me ~16 hours and $10 to create, not counting the week I had to wait for the original samples to arrive. With online EIN application, my project became a registered company in less than the time it took me to fill out an online SS-4 registration!

But what did this prove? That the operationalization of a startup is actually not as difficult as many people fear it to be, it requires first an idea, followed by a thought out plan of operationalizing it. My plan was thought out from my experiences in setting up Open Source Websites, ecommerce platforms, Photoshopping, and interacting with international suppliers of physical products. It’s taken a little bit of ambition and persistence over the years but I’ve figured it out over time.

If you don’t know how to operationalize an idea, there are countless resources to help you figure it out. The best way to learn is to try it, you can’t miss if you don’t shoot! I love chatting about new ideas, ask me if you can’t seem to find a way, I’m happy to help!

The Entrepreneurship scene here in Boston is a wonderful thing, I know because I’m thick in the middle of it. I’ve noticed there is a sudden response from the professional community in becoming mentors to young entrepreneurs and startups, something which many have called for in the past. I attribute much of this wave to MassChallenge’s (MC) program which has successfully garnered the support of over 160 Mentors for finalists to reach out to. As a finalist in MC, this has already proven invaluable to me just a few weeks into the program! From the perspective of an entrepreneur in a startup there is one very interesting observation, two distinct types of mentors – the Rockstars and the Stagehands.

Rockstar Mentors, they’re fewer in number, have started and run successful companies, are quite elusive, but have much to learn from! I’ve come across quite a few rockstar mentors that end up being far from what I expected from a mentorship perspective. Recognizing these mentors have very limited time, I often find myself competing for just 15 seconds after which I begin to hear whatever advice they can throw at me before they must move on to the next startup. It feels as if a drunken kung-fu master instructing me to focus only on punching harder rather than looking at the technique.

Fighting for just a scrap of a rockstar mentor’s time, I often get advice that really doesn’t provide much guidance. A well recommended Angel/Mentor in Boston who took two weeks to get five minutes with, commented first to me on the unattractiveness of a ‘508’ area code in our company phone number. Wait, what? To what extent will this determine our business’ success or undermine its core value?

I’ve decided to acknowledge this and move on to the another class of mentors, what I call the Stagehands – those who are making it happen, and this is where my appreciation for mentors really comes in. The mentors I value most are people who have given a solid hour of their time to understand our business, our ambitions and hurdles, and who follow up with genuine interest to see how we're doing.

The interesting thing is that the founder of a wildly successful company is great for the quick two minute advice but often not the best for detailed ideas since it was the guys on the ground that have made things happen.

It's these mentors that have proven the most value, the ones who have been active in their field, such as a BD guy who just finished a successful stint at a startup. Advice from stagehand mentors has proven more functional with not only macro-level strategy but tactics from the street. This is also validated by the same advice most successful founders give: Hire people that are smarter than you! Well let’s find those smarter people that backed these rockstars we’re meeting!

We're riding the coat tails of the seed stage/angel funding craze, but is mentorship the next wave that has already begun? Seems everywhere I go today it’s all about mentorship. I run the mentorship program at my alma mater Northeastern University’s IDEA Venture Accelerator where my role is to recruit and maintain relationships with a base of mentors who assist student ventures. From recruiting mentors for IDEA and enlisting mentors for my own venture, I’m expecting a much larger wave of mentorship taking hold of the Boston Entrepreneurship scene. While this will benefit the community largely, we need to pause and think a bit on what types of mentorship are most helpful to our growth as entreprneeurs and founders. Being specific about the skills and experience is becoming increasingly important. Let's see how this pans out for us, the show is about to begin!

A while ago I was spotlighted on GreenhornConnect as a founder of a startup in the Boston community. They asked interesting questions about Zazu, how I got started in Entrepreneurship and my take on being an entrepreneur.

1) What is your current Startup? (Name & URL)
Current startup is called Zazu (www.getZazu.com)

2) What's the elevator pitch?
We’re the smartest damn alarm clock, waking people up to their calendar, weather, email, and news, making their mornings and rest of the day that much easier.

3) When did you know you wanted to be an entrepreneur?
In 5th grade, my friend Fahim and I would buy toys from the dollar store and resell them on the playground. The day we made $20 we were called to the principal’s office and introduced to the concept of soliciting and to how it wasn’t allowed. Since that day I have consistently found ways to create something new. Nothing in High School really ever panned out for me, as it was a good opportunity to learn that starting a lawncare business is not necessarily the best idea. Things really started to click in college which dawned the creation of BostonBookWorks and CoopRatings.

4) How did you meet your co-founders?
I had been working with Aaron on creating the Husky Innovation Challenge at Northeastern prior to Startup Weekend 2009 where we met Marc. I pitched them on the idea and we sat down to figure out what we could come up with. There seemed to be quite a few complimentary skills amongst us and sure enough, Zazu was born!

5) What was the best advice you ever got?
Build Human Capital. I’ve found that whether you’re in startup or working for the man, arm yourself with knowledge and experience. At the end of the day, it’s what will set you apart from the herd.

6) What Startup(s) are you most excited about today? Why?
Second Market. I have a strong interest in Finance and in the startup world there’s very little innovation in that space due to the highly regulated and competitive industry. Second Market came in and disrupted how small/private companies are valued and created liquidity in an area that was traditionally not used to such opportunity.

7) What's your favorite part about being an entrepreneur?
Facing challenges head on. Everyday is an adventure when running a startup and the most exhilarating feeling is coming home at the end of the day and knowing that you overcame challenges in a way that made a true impact.

8) If you could recommend one book for entrepreneur's to read, what would it be and why?
Though a very simple book, Seth Godin’s book The Dip emphasizes the importance of being unique, creating barriers for competitors, and not wasting time. It is somewhat of a cliché book to read, but it’s real stuff and definitely something that entrepreneurs could benefit from.

Check it out here on GreenhornConnect!