Sramana Mitra: The State of Entrepreneurship in Silicon Valley | Sramana Mitra

 

About Sramana Mitra

Sramana Mitra is the founder and CEO of One-Million-By-One-Million, an organization committed to helping one million entrepreneurs reach one million dollars in revenue. She is also the author of numerous books including: Billion Dollar Unicorns, Bootstrapping With A Paycheck, Carnival In The Cloud and From eCommerce To Web 3.0. In 2015, Sramana was named as one of the top 10 LinkedIn Influencers in the World. Prior to starting One-Million-By-One-Million, Sramana a founded two companies and worked as a consultant in Silicon Valley.

 

Interview Transcript of: Sramana Mitra: The State of Entrepreneurship in Silicon Valley | Sramana Mitra

Alan
Welcome back to visit me here today with Sramana Mitra, and welcome to today’s show.

Sramana
Thank you for having me. Great to be here.

Alan
So you’ve done a lot of things in your life. But I’d like to start with bringing the listeners up to date of of your your career path or history from school MIT graduate.

Sramana
Well, I grew up in India, in pre liberalisation India. And that was a long time ago, through the 70s and 80s. And I came to America for college and then University. So I went to Smith College for undergraduate computer science and economics. I had a passion for economics as well, but computer science was my main area of work. And then I went to MIT for grad school. While I was at MIT, this thing called the internet happens. And if you remember, the commercial Internet is 1994. When Netscape went public, the world kind of changed. And I was at MIT, I started a company in 1994. I was in the Ph. D. program, and I left MIT in 95. To do the company full time I took my masters did not stay for the PhD, and just went on to swim in the.com, boom of the 90s, mid 90s. I did one company after another as founder CEOs of three companies, by the end of that decade, and then the market crashed. So that was that phase of my life. And I started doing other things.

Alan
Okay. So what is so bringing us up to speed? What are you working on now in the

Sramana
So 10 years after that? So 2000 is when the.com crash, I spent 10 years consulting and writing and so forth. And in 2010, I started a company called 1 million by 1 million, which is my fourth company. And that is the first and only global virtual accelerator for startups in the world, and 1 million by 1 million. Our mission is to help a million entrepreneurs reach a million dollars and beyond in annual revenue. That is the mission of our work. And we run it from Silicon Valley with a global footprint. And we cater to helping entrepreneurs get their act together and put one foot before the other.

Alan
So how, when you started this, the I’ll call it a project as you’re looking at putting entrepreneurs on the map and enabling them to get to the next level. Did you see a gap in the market of Yes, filling that in? And yes.

Sramana
Remember I said I consulted for 10 years before starting my fourth company 1 million by 1 million. And that was a time when I was consulting on all sides of the technology ecosystem. I was working for big companies, I was working with VCs, entrepreneurs trying to raise money, turnarounds, all kinds of things. And in that immersion process, one of my observations was that over 99% of the companies that are looking to raise venture capital get rejected, and they reject get rejected for good reason. They get rejected because they don’t fit the requirements of the venture capital model, which is hyper fast growth, and hyper large market size market opportunity. Very few companies fit that model, you know, going from zero to 100 million dollars in revenue in five to seven years, is incredibly difficult. It’s an anomaly not a regularity. So, you know, hundreds of 1000s of companies are not going to get there. So that was the gap that I observed is that all the accelerators, all the incubators, accelerators, and there are many of those at that time. They were, you know, 7500 to 8000 of those. Now, there are more there probably more than 10,000 of those. They’re all trying to act as feeders into the venture capital ecosystem. They all want the their portfolio companies to raise money. And I thought that was arithmetically flawed.

Alan
There are organizations out there like Kickstarters and the crowdfunders. How does your organization compared to those?

Sramana
We don’t don’t we’re not a crowdfunding platform at all. We are primarily an educational and mentoring platform. So we have a full online curriculum. And we do a case study based program. So we have over 800 successful case studies of entrepreneurs who have built big companies, small companies, various kinds of companies in various kinds of ways. We have like 50 Plus unicorn entrepreneurs 400 Plus venture funded companies, 300 plus bootstrapped entrepreneurs. And that’s the body of work on which the whole curriculum is based. It’s entirely case a case study based. So that’s how we teach And then we mentor people on their projects. So people can learn methodology through the curriculum. And then mentoring is online online, mentoring, online roundtables. And then we have a tremendous Rolodex. So we introduce our entrepreneurs to whether it’s potential customers, channel partners, investors, media, analysts, other advisors, whoever can help them in their journey. That’s the program. So we don’t fund. And we don’t run a crowdfunding platform either. But we do have a large community of investors who work with us, whom we introduce our entrepreneurs to if they’re fundable only if they’re fundable. Not everybody is fundable. As I said.

Alan
I visit here today with Sramana Mitra, and she is the founder of 1 million by 1 million, I need to take a quick break. And we’ll be right back after these messages.

Alan
Welcome back and busy here today with Sramana Mitra, and she is the founder of 1 million by 1 million. And in the first segment, we talked about how how your company came about, which is more I put it more of a project because it’s more of a mentorship.

Sramana
Or it’s a company, it’s a business. It’s not a nonprofit, it’s not a project. It’s about a company we

Alan
Okay, let’s talk about the revenue model. Okay, we have a new company coming in, and they say, Hey, we need some mentorship or assistance. How did how did they go about the process of Sure, I mean, part of your organization.

Sramana
So the first touch point is we do we we ourselves run a media platform. So there’s a tremendous amount of content that we produce that is available for free out there. And you can just learn from that. And we have what we call a free mentoring roundtable. Every week, online, we run it on the WebEx platform, and entrepreneurs from all over the world join into that platform. And that happens every week. And we have had over 60,000 people participate in those. And that’s we have like a 30 Minute Talk Show segment, this kind of thing. And then we have entrepreneur pitches, which are kind of working sessions where I work with them to on their strategy. So that’s the online mentoring, for free. Beyond that, if entrepreneurs want to take the next step with us, we have 1 million by 1 million basic, which is a curriculum only program. And for that demand monthly subscription fee is $99 a month. And then we have our full acceleration program, which is 1 million by 1 million premium. And that is $1,000 annual membership fee. So our philosophy is it’s a complete democratization of entrepreneurship, incubation acceleration and education. So anyone from anywhere in the world, as long as you’re working within the domain of technology and technology enabled services, you can use the 1 million by 1 million program and learn and, and we’ve priced it so that all geographies can afford it. So we do have America still the US North America is still our biggest geography. But we have very big adoption in India. India is an incredibly hungry entrepreneurial ecosystem at the moment. And we have very big penetration into that market. And we priced it so that the Indian entrepreneurs can afford it. That’s the business model. We also work with corporates, we have corporate partners where we run their incubation programs. And that model is called incubator in a box, the 1 million by 1 million incubator in a box and that’s, you know, companies are using that to run their incubation acceleration programs.

Alan
That’s a fascinating, you know, basically the community that you’ve been able to create with very cost effective, yeah, free in a nominal cost. And then

Sramana
He’s touching with touching over half a million people now. So it’s very, you know, quite a substantial community. You know, in just about a couple of years ago, LinkedIn named me one of their top 10 influencers. Number one was Bill Gates. Number two was Richard Branson, and I was number 10. That really helped us with the distribution. So today I have over 350,000 followers just on the LinkedIn influencer platform those kinds of, you know, recognition or acknowledgement has helped us distribute the program very broadly.

Alan
In addition to you use WebEx, but in addition to that you have conferences where people can come and attend. And

Sramana
So we have recently started just last fall, we started this thing called run the ruse in person run the woods. We do those currently, we do those at Cafe Baroni in Menlo Park. So once a week, we just get together and have coffee with the whoever shows up. And that’s been very nice. We see a lot of interesting companies through that program and gives us an opportunity to touch base in person as well.

Alan
Now, I understand that at certain points, you’ll help entrepreneurs receive funding. Yes, and you have a pretty good track record of their success rate in funding.

Sramana
Yeah, so, I will say this, though, we do not insist that you have to raise funding. And this is a big differentiator between us and any other incubator accelerator, which is the gap that I saw out there is most incubators and accelerators are working as feeders into the venture capital ecosystem. We are not, we are okay with you wanting to build your company without any external financing, because we are not counting on taking equity in your company. That is not our business model. As I just explained to you our business model is not based on taking six to 10% or 15% equity in your company as part of our, you know, participation in your ventures. And we are, as a result, we have democratized we have we are allowing everybody the opportunity to study in the program. However, equal opportunity does not mean equal outcome. Right, just because you’re in the 1 million by 1 million program doesn’t mean that you can get funded. And it also doesn’t mean that we are going to introduce you to investors, we will introduce you to investors, if we deem your business, fundable. And there’s a big difference between fundable businesses and businesses that need to be built organically in a self financed manner. And, and we believe that a company that takes five years to get to, you know, $2 million or 10 years to get to $5 million dollars is still a success as long as a profitable business, you know, creates livelihood for a bunch of people solves a good problem has good customers, we consider that a success. Our definition of success in entrepreneurship is customers revenues and profits. Financing is optional. Exit as optional. That’s the philosophy of the program

Alan
Sramana I need to take a quick break and visit here with de with Sramana Mitra and we’ll be right back after these.

Alan
Welcome back, and i’m visiting here today was Sramana Mitra. And she’s the founder of 1 million by 1 million. And witches, mentor in mentoring relationship or company helps him entrepreneurs get to the next level.

Sramana
First and only global virtual accelerator in the world. We work most almost exclusively with technology and technology enabled services entrepreneurs. So that is one thing that I have to, you know, share with you in that we are not the place for example, drug discovery companies, pharma companies trying to do drug discovery, we are not the right accelerator for you. That’s we don’t have the expertise here. For that.

Alan
Let’s jump into some of the case studies and companies that you work with what are some of your favorite stories?

Sramana
So I probably should start with the one that is the biggest in our portfolio. This is so we started in. I think we launched 1 million by 1 million in November of 2010. And in April 2011 A company came into the portfolio. it at the time it was called Fresh desk today it has changed its name to fresh works. This company. We helped them raise their first round of funding funding and coach them through that early stage process. And it was in the program for three years after that. The company today has more than 100,000 customers has raised 140 $9 million in funding and has done very well. It’s a customer support software as a service This. So cloud services, customer support. So that’s, you know, kind of like this outlier of the charts, high level of success, very large amount of funding. Our philosophy, however, because we’re trying to do 1 million by 1 million is to do capital efficient ventures. So it’s not like if you are part of 1 million by 1 million, we’ll constantly push you to raise money. That’s not what we’re going to do. So let me give you a completely different kind of example. So just this December, we are right now in March of 2018, December 2017. During the holidays, I had two of our entrepreneurs who have been in the 1 million by 1 million program for several years each. Come visit me at home in Menlo Park, one of them is based in Calcutta. The other one is based in Menlo Park. Each of these in 2007 have hit 10 million in revenue with no outside financing. And that’s really exciting. So the reason this is important, and you know, they will always tell you that these companies are constantly being steered towards financing. Everybody wants them to get raise money, or it’s like, they kind of dismiss these companies that Oh, you haven’t raised money. Why? Why should we take you seriously, the company is doing $10 million in profitable revenue. What is there to dismiss them about? So this kind of stuff really Madden’s me? Absolutely, man, it’s me. I was talking to an entrepreneur, a woman who has built a company that does $5 million in revenue, and it has taken her a while to build this company. And she was very apologetic. She was like, you know, I’m just doing $5 million in revenue. And I’m like, Are you profitable? She said, Yeah, we’ve been profitable all along. Because we’re a bootstrap company, we have to be profitable. And I said, Why are you apologizing? You’re running a $5 million profitable company, you’re catering to a set of customers that are happy with what you’re offering them? Why are you apologizing? So there’s, you know, there’s a lot of myths and a lot of garbage in the industry. About that you have to raise money and financing equals success. We are completely opposed to that point of view that worldview, we believe entrepreneurship equals customers revenues and profits. Financing is optional. Exit is optional.

Alan
And we have quite a few mentors that are stepping in and helping us I believe, in the first segment, you mentioned 800.

Sramana
So the way we do the, the, you know, bringing in the knowledge of these, you know, successful people who have done it before, very long ago, when I started in actually before I started 1 million by one mean, there was a body of work that I’d started doing in 2006 1 million by 1 million was not launched until 2010. In 2006, I started writing on my blog, a series called entrepreneur journeys, where I would invite entrepreneurs to come and tell their stories in gory details, like how to how did you put one foot before the other? You know, where were you born? Where were you raised? What kind of circumstances all the ways like how did you put one foot before the other. And these stories became very popular. And soon after, I started publishing them as books. So I have now published 12 volumes of entrepreneur journeys books. Each of them have 12, straight 16 case studies, and my analysis of what is interesting about this, these stories, and each of them double click down on particular topics. So there’s a book called billion dollar unicorns, where you can read about a bunch of unicorn entrepreneurs who have built, you know, billion dollar plus market cap companies and their journeys. How did they put one foot before the other? How did they tackle all the different strategy challenges that come up? All this is available in the 1 million by 1 million curriculum, we interview them constantly in our roundtables and mentoring sessions and so forth. But it’s not that you are constantly sitting down with these people you are learning from a body of work that is available to you accessible to you from anywhere in the world at any time, you want to access them. So that’s the philosophy of mentoring. I do the the in person on you know, project based mentoring, I do those myself, but they’re in roundtable format. So every week you have roundtables, where you can come and share your project and we work together as a working sessions and they are case study based learning philosophy. So people who come can who are listening are also learning through that interaction.

Alan
Is there a common characteristics to trade with those who reach great success versus those who don’t.

Sramana
You know, of course, there’s a lot of X factor in this business, but in in studying all these entrepreneurs that we have, both have as mentors, case studies, etc. And also the ones that we have mentored ourselves all these years, this is now our eighth year of being in business with 1 million by 1 million. The one theme, the one mantra that I want to leave your audience with, is bootstrap first, raise money later. Because today, there’s a bunch of trends that are out there, which you need to take into account one of them is starting companies have become a lot cheaper. So you can get much further than you could earlier 20 years ago, or 15 years ago, it was much harder to get that far in a capital efficient way, today, it is much easier. So you can get to a lot of validation. And as a result, investors are looking for you to come to them with a very validated, deeply validated idea or business. So they want to see that you have talked to customers, in some cases, some entrepreneurs want, some investors want to see already revenue, paying customers, etc, people have different sweet spots. So right off the bat, if you can mitigate the risk of getting, if you are in the funding track, if you can mitigate the risk of getting to that level of funding with more validation, it will, you know, probability wise, you’re basically increasing your probability of success. Now, example, we have a company that has been in our program. So they came in four years ago, learned the methodology, went out and executed for a couple of years, got customers got revenues came back in. And right now this company is going into funding, I have introduced them to 40 investors. And they have heard back from 30. Of those, they’ve already had 20 meetings, this is a very high rate of hits, right hit rate. Why? Because they followed exactly that bootstrapped first raise money later mantra, they 2017 with no external financing, they did 1.2 million in revenue. In 2018, they’re forecasting $3.5 million in revenue. And they already have close to a million dollars in bookings and we are only in March. So this kind of a situation is gives you a much higher level of probability of being able to raise money than if you came in with, you know, no customer, just a concept and so forth. Concept financing is almost gone out of the window at this point. You know, I was an entrepreneur in the.com era as well, at that time, people were funding concepts, I got a concept on it. But that’s not happening anymore. We’re just in a very different world of entrepreneurship. At the same time, there’s a lot more money in the system, there are in the last five years, there are 500 to 700 Micro VCs that are operating in the the broadly what we call seed ecosystem. Now seed spends a lot of things precede seed post seed pre series, a small series A all of that kind of falls in seed, because the the traditional VCs, the larger VCs, the Kleiner Perkins acquire their Andreessen Horowitz there, they want to do larger size series is they want to do five to 7 million even 10 million series is to qualify for a five to 10 million series Azle. Very, you know, you have to have a much more mature company with much much stronger metrics getting there is not that easy. So you’re you could be doing five rounds of financing before getting getting to Series A. So there’s a whole complex evolution that you are dealing with right now. And and you have to figure out what is your definition of success in that. So one way to do it if you want to raise money and and go that route is to do bootstrap first raise money later. Another way to do it, is do it very capital efficient and seek early exits. That’s another way that a lot of companies succeed because if you look at the vast pool of exits that happened in the industry, they are in the 50 to 60 million or lower. You know the 100,000,002 100,000,500 million billion dollar exits a few are few and far between. So again, probability, if you want to if you want to build a company for 1,000,002 million and 5 million and sell the company for under 50 million, sometimes under 20 million. That is also success. So you have to kind of our philosophy is we’re broadening the definition of success. We’re looking at all these different angles in the 800 Plus success stories. They’re all flavors of success. You know, there’s a company in Indiana, that’s doing a virtual company, the guy bootstrapped with a paycheck, he kept his day job. And he built this company. Now they have about 50 people. But the 50 people are not in Indiana, they’re like 10 people in Indiana. 50 people are all over the world. He’s doing a virtual company. And they’re already at 5 million in revenue. And, you know, again, it’s a success. To me, that’s a success.

Alan
How does an individual sign up for your services?

Sramana
Go to the website, one, m by one M. So the number one the letter M, B y, the number one the letter m.com, one by one m.com. And then everything is there, you get the full description of the program. There’s lots of content FA Q’s video FAQs, and you can sign up right there.

Alan
Sure, man, I really appreciate you being on today’s show. And we’ve run out of time. My pleasure. Thank you for having me, Ellen. So thanks for joining us here on American Dreams and join us next week right here on the station.

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This transcript was generated by software and may not accurately reflect exactly what was said.

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