How we bootstrapped to our first profit

It feels nice. A full 24 months after we wrote the first lines of code of CutShort, we have finally turned in profit this month. A proud moment for a bootstrapped startup like us.

How did we reach here?

It looked hard but just stuck to the basics. We worked hard building a good product that solved the problems of our users. We optimized for growth & learning and not for revenue- in fact we were happy to have regular users who didn’t pay us in cash but in good will and loads of word of mouth.

Looking to bootstrap? Here is a caveat!

As we have explained earlier, there were two factors that worked in our favor. First, we were in a great market in which users had a BIG problem, one that they were accustomed to pay for. Hiring talent has been an established need and companies are accustomed paying for it. If you are trying to solve a new problem for which users have never paid in the past, it may not be so easy for you.

Second, our team was incredibly lean and cross functional. We just had 5 full time members who pulled the weight of our entire development, marketing & support operations. If you need to hire more and pay them enough salaries, your costs will be much higher.

What’s next?

Yes, this is a proud moment. It’s liberating to know that we won’t need to seed our bank account for outgoing expenses next month. But we’re aware that our costs are artificially low right now. We don’t pay the founding team and our costs will balloon as we grow faster.

So our next milestones are pretty much laid out clearly. We need to continue growing the platform, both in India as well as globally. We are excited about our new products such as Channels and Voila and will continue to make our flagship products stronger. Alongside, we absolutely need to organically grow revenues to fuel our growth and product development costs.

The first milestone took 24 months. We definitely believe our next milestones will come about faster.

Suggestions or comments? Feel free to comment below.

Banning Amazon and Uber won’t work; let’s help each other ?

In 2016, while the world seemed to look inward (e.g. Brexit, Trump), it’s great that we Indians managed to largely remain a liberal lot. We Indians retained our firm belief in free markets and unanimously voted against anything that threatened the level playing field. We shot down clever monopolistic ideas such as Airtel Zero and Facebook FreeBasics and became unabashed fans of global companies such as Amazon & Starbucks.

So it wasn’t surprising when most of Indian startup community joined hands in criticizing two of our most successful entrepreneurs – Sachin Bansal from Flipkart and Bhavish Aggrawal from Ola when they urged the government to support them  like China does.

The problem with China model

Sachin and Bhavish have their reasons, but are perhaps forgetting what they seemed to know so well until recently. While protectionism may help in short term, it only makes companies incompetent in the longer run. Driving out global companies from Indian market will also deprive us of the world class products that our consumers love and inspire our entrepreneurs.

This “fair competition” in India has been instrumental in preventing monopolies by local companies, which is what has happened in China where a handful of companies such as Tencent, Alibaba, Baidu completely dominate many markets. Without this competition, we simply won’t have created strong companies such as Paytm, Flipkart, Ola, Oyo Rooms, Zoho, etc in the first place.

But are Indian startups ready to fight this competition?

That said, Sachin and Bhavish (and a few others) do have a valid point. While we invite global companies to India, are we creating local companies that can compete with them?

Because if not, then the whole purpose of “fair competition” will be lost. Instead of monopolies by local companies it will create monopolies by foreign companies. In fact, this has already happened in India where many products from global giants such as Facebook, Google, Microsoft and Amazon completely dominate the various markets.  And this domination is only accelerating – companies such as Slack, Dropbox, Snapchat and Airbnb have gained significant market share. And tons of others are preparing for the onslaught in near future – such as Netflix, Spotify, Stripe, Trello, Intercom, Medium, AngelList & ProductHunt.

So why do foreign startups win and how can compete with them?

Unlike a lot other people who blame the weak visions of our entrepreneurs for this, the truth is that we simply don’t have the supporting ecosystem to create world class startups. We still don’t have the 3 basic ingredients  — easy access to capital, availability of experienced talent and a mature ecosystem that offers mentors, initial adopters, supportive social fabric, better infrastructure and a strong legal system.

Yes, things have improved in last 5 years as far as funding and talent is concerned. But the big problem is – our startup ecosystem hasn’t improved much. Yes, startups are now more mainstream but we are still relative immature – we don’t understand failures and over glamorize startups.

The biggest opportunity missed here seems to be getting contributions from startups themselves. They often see themselves as only the “beneficiaries” of this ecosystem — not as “givers” who could help others too. Unlike the bigger startups in China which actively invest or partner with other startups in many different sectors (such as Tencent going out of the way to help Didi Chuxing) those in India seem to be more internally focused. Take a look at Alibaba’s investments in different sectors recently:

china startups

In contrast, contributions from Indian startups mostly come in the form of small angel sums or pep talks at startup events by their founders in their personal capacity.

Building ecosystem is a shared responsibility

However, let’s get it straight – supporting other startups is not a responsibility of only the bigger startups. There are thousands of startups who could pool their resources to build a strong ecosystem. They are often too internally focussed and are uninterested to do simple things that could help the ecosystem. They could be early adopters of other startups, mentor young entrepreneurs, promote them in their marketing channels or provide office space to others.

To give a small example, at our startup, when we research products or services to buy, we make it a point to check the Indian alternatives available. If they offer desired quality of service at similar price, we try them out first. Today we use Sendx (instead of customer.io), Pepipost (instead of Amazon) and SendOTP (instead of Twitter Digits).

We also offer free promotion space to some high quality startups in our online events that attract thousands of high value professionals:

promote your startup

Depending on your startup, you way to help others might be different. You could perhaps partner with your favorite Indian startups, give them honest feedback to improve or simply have a Friday post to feature them on your Facebook page.

Let me know if your startup would like to play a more active role in building the startup ecosystem in India. We can explore some ideas and take it to the 1600+ startups that use our platform.

Let’s do this in 2017!

Helping core teams at startups that are closing down

It first happened a few weeks ago. We talked to two cofounders who had recently shut down their Mumbai based startup turning to CutShort to find full time jobs. They had started their venture in 2015 but decided to take a break due to lack of scale/funding.

In the world of startups, where 50% startup fail in the first year, this is not unusual.

But then it started happening very frequently over the next few weeks. Every week, our team would routinely discover cofounders/tech leads/marketing heads/operation heads on CutShort to connect with new employers.

It’s then we saw the trend – many ventures started in 2014-15 were closing down at a rapid pace this year. In Sep, 2016, Inc 42 reported shut down of more than 500 startups in previous 20 months. Accounting for lesser known startups in the media circles and the increased pace of failures since September, it won’t be far fetched to estimate the total shutdowns to cross 2500 by the time year 2016 winds up.

All this smart talent – left direction-less

These are smart people – cofounders, marketers, growth hackers, developers who had the & passion & courage to start or join an early stage startups.

But after talking to them we realized it’s not easy for them to find their next opportunities. Not many companies have the right roles that fit and excite them. And there are companies who are not sure about hiring people with significant experience for cultural or organization fit reasons.

Announcing The KickStarters – connecting experienced startuppers with their next opportunities on 22nd Decemberkickstarters

To help these cofounders and core team members at such startups, we are organizing an online event on 22nd December. The idea is to seamlessly connect them with the companies that value the talent, energy and motivation these teams can add to their teams.

Register fo The KickStarters 

FAQs:

  • When and where is this event?

This event will happen online on 22nd December on CutShort.  No need to travel anywhere. Just connect with the right employers discretely.

  • Is there a pricing?

No. This is completely free for CutShort users.

  • What kind of people I can hire at this event?

As the name “The Kickstarters” suggests, these will be cofounders/tech leads/marketing heads/operation heads cofounders at a startup that has laid off people or closed down.

  • What kind of companies will be attending this event?

Right from early staged to funded to profitable product companies. All the employers will be verified. We will not give access to third party recruitment agencies.

How to evaluate a startup job before joining

Deciding to take up a startup job is confusing, even for seasoned professionals. There is limited information available about startups and the popular opinions are often subjective and based on the media hype. Result – many people either join a wrong startup or skipping a very promising one.

As an example, let’s say these two startups have offered you jobs:

  • FashionNext, a hot new fashion startup that has not raised funding yet.
  • TalkNow, VC backed SaaS startup with 25,000 app downloads

TalkNow looks like a better choice – after all it’s VC backed and also has some visible traction. But what if I told that the FashionNext is started by seasoned Myntra employees and is soon to raise a seed round from a marquee set of investors such as Ratan Tata & Flipkart founders?

You might be reconsidering now. But wait, here’s another fact – the team at TalkNow have an IIT/Stanford background and had sold their previous company for $25M.

Confused which one should you join? There isn’t a clear answer, but here is a model we have developed at CutShort that might help you decide.

Finding the unknown: How risky is the startup?

Let me be clear – predicting which startup will be more successful is extremely difficult. Even seasoned investors get it wrong 9 out of 10 times.

But as a potential employee, your goal is NOT to pick the next unicorn. It is to find the best startup job that offers you the right career opportunity at the lowest risk possible.You know what you’d be investing (your time & energy) and what would be the rewards (new job role, compensation, stock options et al.). What you don’t know is how much risky the startup is. Will it survive, and flourish, in the coming years? Or will it be another one to fire/lay off people or just shut down completely?

Determining that risk with certainty is difficult. But we at CutShort have developed a model to guesstimate this risk. It is based on our learning within the overall startup ecosystem in India and abroad. (It is still evolving, so please let me know your suggestions below).

The Startup Risk Calculation Model

This needs you to do some unbiased, objective research on the startup. The model simply involves giving risk scores to the startup along these dimensions.

The Stage Risk

Is the startup at an idea stage or has a working product with paying users?

The earlier the stage, there are simply more things that can go wrong. The idea might not work or be difficult to execute, the team might break apart or that committed funding may never hit your bank.

Depending on the stage of the startup, give these risk scores:

startup job - stage

The Team Risk

Having IITians or ex-Google, ex-Paytm OR ex-XYZ  is NOT always equal to having a strong team.

The strength of the team depends on the context of the startup. You need to figure out – what does the success of the startup most depend on? Is it the ability to build the complex piece of technology (like building Alexa or Siri)? Or it’s about putting together the entire value chain to solve the problem at scale (like Amazon)? Or it will come down to securing massive funding to beat out the competition (like Flipkart)? Ask the startup this question and discuss with your friends/well wishers at other startups.

Once you know the main challenge, the core team at the startup should have the necessary skills/experience to counter that. Brand names may not matter there – a team of IITians faced with the primary challenge of striking big partnerships may not look like a winning team anymore.

startup job - team

The Financial Risk

99% of startups fail due to running out of money.

Beyond the initial funds put in by the founders, more money either comes from the revenues or external funding. You need to understand from the startup:

  1. What is their next financial milestone – securing (more) funding or become operationally profitable?
  2. What is the expected time frame to reach that milestone?
  3. How much money they have as “cash in bank”, not “expected money”.

I know – you might feel a bit uncomfortable asking these questions. But asking them have two extra benefits. First, great startups actually love candidates who are serious about their careers and are not afraid to ask the right questions. Second,  the startups that don’t handle these questions confidently are either not well prepared or not transparent enough and should be avoided.

A caveat though – apply your own discretion while trusting the information shared by the startups. Startups often underestimate the challenges in reaching either of the milestones – funding or getting profitable. Investors typically look for proven traction (and nowadays – even unit economics!). Getting profitable is even harder – you need to have the full product + marketing + sales + operations.

Once you have more clarity, you need to estimate the runway the startup has before it runs out of the money it has in the bank.

startup-financial-risk

So should you join that startup?

Simply add the above 3 risk scores to find the overall risk score of a startup:

Startup Risk Score = The Stage Risk + The Team Risk + The Financial Risk

Congratulations, now you have some idea of the risk. But a high risk startup is not necessarily bad for everyone. Depending on your risk appetite, the current situation and career preferences, you may prefer taking more risk to get higher rewards. In fact, founders/entrepreneurs are an extreme example of such an employee!

To decide whether you should take up that startup job, use this table:

evaluate startup job - final decision

Hope this model will help you select the right startup job and while avoiding the ones that don’t fit.

The factors and numbers used in this model are evolving, so would love to hear your suggestions & thoughts on how we can improve it further.

All the best!

Helping 1000 employees “misfired” and “massfired” by Flipkart

In an unfortunate turn of events, Flipkart announced last week that it is “firing” 800 to 100 employees.

I wrote a LinkedIn post on this topic and was overwhelmed to see 100+ comments from people who have expressed their shock on the way Flipkart has handled this entire event.

Looking ahead: Connecting Flipkart employees with new employers

Criticization doesn’t help anyone. In the above LinkedIn post, I proposed an initiative to easily connect these employees with future employers. The response was overwhelming – 60+ companies (including Amazon, FabFurnish, HackerEarth, GoJek etc) have so far showed interest in hiring these employees.

Encouraged, we have planned a 3 day online event called “Flipkart Connect” to connect the outgoing employees with new employers. A 100% free event, this will give these employees a chance to connect the right future employers, quickly and privately.

Register for Flipkart Connect

FAQs:

  • Where is this event?

This event is completely online. No need to travel anywhere. Just connect with the right employers discretely.

  • Is there a pricing?

No. This is completely free for both employers and employees.

  • What kind of employers will I find at this event?

All the employers will be verified. We will not give access to third party recruitment agencies.

  • What kind of candidates will I find at this event?

All the candidates currently working/having worked at Flipkart.

The event starts on Tuesday (9th Aug) at 11 am. If you are a Flipkart employee or an employer looking to hire them, please register here.

Let us know if you have any suggestions or comments.

SocialHelpouts is now CutShort!

Yes, that’s true. After a year of experimentation and learning, we are changing our name to “CutShort”.

Why? SocialHelpouts was a great name, but only when we had explained it to someone for a good 10 minutes. When an average attention span is less than 10 seconds, asking for 10 minutes online is like asking for someone’s life.

“CutShort” is short, sweet and just explains our mission well. After all, we want to cut short your long winding path to the right jobs or candidates. Really short.

It took us about 10 days to rebrand our system. And it will give us an extra 10 minutes in our conversation with users. Not a bad bargain.

What should we use those extra 10 minutes for? How do you find CutShort? Eager to hear your thoughts!

 

 

 

The slippery slope of startup funding

14th April. SocialHelpouts office. 11 pm.

Nikunj: Guys, we need to pitch in VC round table tomorrow morning. Can we make a funding deck tonight?

Anubhav (rolls his eyes): We are raising funds?!

Nikunj: Not really. I had filled up an application form for a pitching event. They shortlisted us.

Vinit (opens a pitch template): Guys, we need to put in a funding amount. How much will we need?

Nikunj: I think we can do with $250K.

Vinit: I’ve heard that no matter the amount, the investors will take 15-20% stake. How about putting 1.5 million?

Anubhav: Better. But how will we justify the spend?

Nikunj (pulls a rabbit out of a hat): We need to hire 4 engineers + 2 marketers + 2 support/sales. To house them, we will need more office space and yeah we could also run some ads.

Vinit: That still won’t use up 1.5 million.  Let’s hire more in tech to build a mobile app and validate other verticals we want to attack.

That’s when it hit us. We were going down the all familiar slope so many startups have gone down before.

The mistake is common. Raise huge funding just because it’s available and then figure out ways to spend it on things like nonviable discounts (like Foodpanda), overhiring (like TinyOwl), crazy marketing blitz (like Housing.com) & funky parties (like Stratton Oakmont).

So we reminded ourselves again. When we raise funding, we would:

  • Raise only the amount that we need. In return of a smaller stake.
  • Raise more if investors really insist, but let make clear that the money would remain unused in the near future.

Will this work? Would love to hear experiences from those who have tried doing something similar.

(At SocialHelpouts, we are disrupting job boards by noiselessly connecting startups with the right people. Our first milestone is reaching 250K users and we are sharing our journey on our blog. Read more posts: why we didn’t raise funding early on and these are our hiring lessons)

Our hiring hacks

Like many of you, we have spent a fair time in hiring & faced several challenges. So many calls, so many meetings – all have yielded nothing. But recently we were able to hire someone in just 3 days flat, from start to finish. Upon reviewing the process we discovered some hiring hacks that we inadvertently used.

(Thanks Tarun Markose from Teemac for prodding into it and making us answer our own questions!)

  • We had done our homework. We knew exactly what the role was about and what qualities to look for. Not only me or Anubhav or Vinit. All of us had a clear idea of the impact this role will bring about. It’s amazing how fast you can move with your hiring when all your stakeholders have 100% clarity of the role.
  • We had set right expectations: We recently wrote an open letter to all prospective employees and the gamble paid off. Yes, it has turned away 90% of candidates, but has got applications from those who fit our culture better. The blog also sets an expectations of high level of transparency and honesty from both sides. Pretensions are checked in at the door.
  • Brand awareness: This was critical. Over a period of time, we have been able to establish our brand and company values. Bonus points if your potential hires have used your product and have had a positive experience with it.

Energized with this hiring, we took a longer look at our hiring process and laid down these rules:

  • Don’t hire for the status, hire for the trajectory. This means choosing people who are smart, hungry and have a point to prove. Not necessarily from IITs or big brand companies.
  • Don’t hire if your gut says no: Many times we were tempted to hire experienced people who struck the right chords, but were not really aligned with our vision.  We’re glad we didn’t give in to this temptation. Yes, one can always fire them later, but that’s a high risk gambit that we avoid.
  • Don’t over-convince people: By your means, sell them your vision and try to get them excited. But after a point, just stop. If you have to convince them too hard, they are unlikely to stay with you for too long anyway.

So what are your hiring lessons?

Why we didn’t raise funding early on

 

race-for-funding

Are you guys funded?

Everyone loves to ask this question. People at startup events, college buddies on WhatsApp groups and even co-passengers on flights.

And sure, I get it. In the world littered with umpteen startups, funding reflects a certain external validation and “seriousness” of your venture. So nothing wrong with this question, really. But what gets to my nerves is the way the conversation goes next:

I: No, we are bootstrapped.

The guy: Uh oh. Yeah, funding is a big problem these days.

Wait a minute. I only said we are bootstrapped.  Did it automatically imply that we failed at raising funds? Is raising funds the only way to build a startup?

Of course not. There are many successful startups that bootstrapped to success including the likes of Mailchimp and GitHub. But these are heady startup days and most people equate “funding” with “success”. In an emotional post recently, Sumanth Ragahvendra put it this way:

We no longer care about what a startup has achieved or aims to do, the problems it solves, the benefits it provides or the impact it has had.

We only care about one thing — how much funding has a startup raised. And that amount determines where you are slotted in the startup caste system…

At SocialHelpouts, we decided to skip raising funds early on. Our product idea could be applied to many markets and we were not sure which one would work out better. And even after choosing a market (“network hiring”), our biggest task was to figure out what problems we would solve best for which segment of that market.

At early stage, our biggest task was to choose a market, test it and find our sweet spot. Funding was not going to do it for us – we had to do it ourselves.

So in last 10 months, we evaluated different markets problems and experimented with different solutions to tackle them. We played with positioning and tried different ways of acquiring our users. Along the way, we worked on creative initiatives such as easyConnects, helping laid off employees form PubMatic and Foodpanda and doing highly focused hiring events such as JoinTheRocketship. These things not only helped us test different approaches to solving problems but also helped us identify our own strengths and weaknesses as a team.

Yes, angel funding exists to solve exactly this purpose. But finding a good angel can still take months and cause distraction away from the much needed customer discovery process. We had sufficient funds of our own that we found more convenient to dip into.

But let me add some caution – bootstrapping can be hard. Expenses on even simple things like hosting and office space can add up quickly. The reasons we have been able to do this are:

We had a lean and cross functional team: We have had only 3 full time employees to cover the entire gamut of operations – development, marketing and support. We all believe in our mission and are happier with more equity than cash.
We had sufficient funds to last 12+ months: This is not about just surviving 12 months. You should be able to provide a great experience to your users. For instance, we spent a disproportionate amount on our website infrastructure, customer experience (Intercom!) and an air conditioned office that kept our team productive.
There was a tangible path to revenue: We were operating in a proven market with a clear revenue potential (hiring companies). Companies will pay for a hiring product that helps them hire, there was never a doubt about that. To at least survive, we just had to build a decent enough product.

Your situation might be different. May be you need to raise funds early or may be you need not. But whatever you do, please don’t just assume you need funding because everyone’s seems to be raising it.

What do you think? Do you think startups are focusing more on getting funded than working on achieving product-market fit?

 

An open letter to people who are interested in joining our team

First of all, thank you for showing interest in joining us and even more importantly, reading this post.

In this post, let us candidly answer a few things we typically discuss with most people in our first call. We hope it will help you decide if you really want to join our team.

Is CutShort a job board?

No. CutShort is one single place for your professional growth. We let you find jobs, attend relevant online events, discover recommended services, find mentors and so on. All of this have one common thread – we cut out all the noise to give you the right results.

What’s our secret sauce? Well, we use Aritficial Intelligence, gamification techniques and network intelligence AND tons of unconvential creativity other startups just can’t copy.

Like LinkedIn, SocialHelpouts is open and free for everyone to use.

Our current status (aka traction)

We have users from 1600+ companies from across 10+ cities who are hiring on our platform. These include bigger companies such as Microsoft, Paytm, Veritas, Time and MakeMyTrip and premium startups such as HackerRank, BrowserStack, Amazon, NowFloats & so on.  Our current network size is close to 1mn and user growth rate is really exploding with $0 spend on advertising and marketing.

Our financials

We are proudly bootstrapped. That means we have deliberately not raised funds. Why? We explained it here. In a nutshell, we have focused on just one thing – making a winning product that solves the problems of our users. It also has made us work smarter and avoid throwing cheap money at every possible problem.

And this seems to be paying off. of Nov’16, we are close to becoming profitable and plan to put all the profits back in the user growth and R&D.

Kind of people we look for

We are very selective about people we hire. In fact, we have only hired 2 out of well over 200+ people we have talked to.

Beyond your job specific skills, we look for people who are ambitious and fearless. People who may not be from IITs, but think they are just as good as them. People who aspire to build successful products and globally recognized companies.

What will CutShort offer me?

We are a small but highly creative & productive team. With us you will:

  • Get 10 times better in your interest area: Get to do everything on your own. Brainstorm with the team and get complete freedom to implement your ideas.
  • Learn how to build a kickass product and a solid startup: We are a lean startup and routinely hack together side projects that solve a specific problem. See an example here. You will learn how to validate, build upon and scale new product ideas.
  • Unmatched compensation: We have decided to cap salaries of all our team members to 30K per month. To compensate for the risk, we offer unmatched stock options to all our employees. This is a simple calculation to calculate your stock options:

Your current market salary: 8 Lacs
Your salary at SocialHelpouts: 3 Lacs
Salary cut per year: 5 Lacs
Salary cut over 4 years (assuming 10% increment each year): 5 + 5.5 + 6.05 + 8.64 = 27 Lacs
Minimum stock options value: 27 Lacs
Multiplier to adjust for "startup risk": 4
Stock option to be given worth: 27 * 4 = 1.08 Crore

ESOPs are highly risky but we believe our “profit first” approach along reduces the risk in realizing this amount enormously.

What is your tech stack?

As a fast growing startup, our tech stack will rapidly evolve as we gain scale and add more capabilities. Currently, we use Node.js, Express, Python, Angular.js, nginx, MongoDB/Redis and host everything on Amazon EC2 cloud. In near future, we expect to invest heavily in data science and machine learning technologies.

Are we missing a question? Post it as a comment below!

Interested? See all our open jobs on this page: https://socialhelpouts.com/company/socialhelpouts