Xconomist of the Week: Sramana Mitra Combats Infant Entrepreneur Mortality
Investor Stewart Alsop has called San Francisco Xconomist Sramana Mitra “a symbol of everything that is great about America: a geek, an entrepreneur, an immigrant, a leader.” He could have added “prolific writer”: Mitra is the author of a blog and five books, as well as three years’ worth of Forbes columns.
Throughout these writings, her focus has been on entrepreneurs and how they can find capital-efficient ways to get their ideas to market. And these days, she’s offering startups capital-efficient ways to get access to consulting advice.
For almost a decade, Mitra was a management consultant in the old-fashioned vein, lending her problem-solving acumen to big companies like SAP and Best Buy for upwards of $5,000 a day. But she says she wants to democratize management consulting and make it something that startups can afford. That’s the essence of One Million by One Million, a for-profit educational program aimed at helping a million entrepreneurs reach a million dollars in annual revenue by 2020.
Program members pay $1,000 per year for access to a case study library, video lectures, online strategy consulting, and private roundtable discussions run by Mitra. And where appropriate, she provides introductions to angel or venture investors. But Mitra has an interesting philosophy about investors: she thinks entrepreneurs should not approach them until they know they’ll have the upper hand in negotiations, and perhaps not even then. “We need to help [entrepreneurs] understand…that there are other ways of building successful, viable, self-sustaining businesses,” Mitra wrote in an Xconomy essay last November.
In a five-question interview yesterday, I asked Mitra to talk about her history as a consultant and writer, how she works with entrepreneurs, when fundraising does make sense for a startup, and Silicon Valley’s blind spots. Here’s an edited version of the conversation.
Xconomy: How did you decide to go into startup management consulting?
Sramana Mitra: I started my first company while I was still in graduate school in computer science at MIT in 1994. I did three startups through the 1990s, and when the market crashed in 2000, that is when I started doing strategy consulting. I hadn’t planned on it—I just had no energy left to do another startup. But as I started doing consulting, it became interesting. It’s an intellectual challenge to be able to insert yourself, assess a situation, and very quickly figure out solutions to problems. I realized as I started doing it that I had a real gift for it.
I had a successful consulting career for almost a decade. In the middle of that, I started writing. I started a blog in 2005, and wrote five books including four volumes in the Entrepreneur Journeys series. I wrote a column for Forbes for three years, all in parallel to my consulting. But as a consultant I made all my money working for very large companies like SAP, Best Buy, and Cadence. That kind of money, startups cannot afford to pay. But as an entrepreneur, I had a huge emotional connection with the startup world, and more and more, this world was coming to me, through the blogs, through Forbes, through the books, asking for mentoring. I had no business model to support me in this, but I could see that [startups] were making the same mistakes over and over again, and a methodology was emerging in my head on how to check what I call “infant entrepreneur mortality.” Every year, 600,000 businesses in the United States shut down. The good news is that 600,000 businesses startup every year as well, so there is a lot of dying and regeneration going on. But why do so many businesses need to die? I came up with some very definite answers to those questions, and that was the genesis of One Million by One Million.
X: Before we talk about that—you’re also known for the public roundtable discussions you host, where startups pitch and you critique. How do those help early-stage companies?
SM: The roundtables are part of my experimentation with this notion of democratizing startup management consulting. I was getting so many requests, and I wanted to help them, but I had no business model to do that. So I wanted to create a forum where, at least on a weekly basis, people who wanted my advice could come and get it. That’s how it started in 2008, and now we are on our 119th session tomorrow morning. In a very quick few minutes, 10 minutes basically, entrepreneurs are able to come and explain what they are working on, give a very quick preview of their issues, and then we give them a reality check.
But 10 minutes is a very limited amount of time. What we are able to do in the private roundtables, which are part of the One Million by One Million program, is give them a lot more. We have an extensive curriculum that has been developed using what we have learned by … Next Page »