'Start-up must raise cash, rope in best'

Last Updated: Thu, Mar 21, 2013 04:43 hrs

Most start-ups fail not because the business idea is bad, but because they fail to scale up, says Google Executive Chairman Eric E Schmidt.

After a dramatic back-stage entry for a chat with a group of start-ups (organised by Nasscom), Schmidt's advice to those was simple: "Do not run out of cash. Cash is life". He said many a time, entrepreneurs took a limited view of their business model and didn't scale in line with customer expectations. "This has led to many a crash," he said.

He said finding a partner could help entrepreneurs withstand the rigours of the start-up stage. Citing his association with Google co-founders Larry Page and Sergey Brin, Schmidt recalled during Google's start-up days, the three had passionate arguments about the business model. This, he said, helped fine-tune the business.

A key factor behind Google's growth from a start-up to a multinational was the company's focus on hiring smart people, he said. "I am not sure I will be able to get a job in Google today," he quipped. Through the years, for acquisitions, too, Google had focused on acquiring talent, he said. "The quality of technical people in Google sets it apart from its competitors."

Schmidt said while attracting talent, it was important to understand most people cared more about the impact of their work, not about money or power.

On the attributes of a great technology chief executive, he said it was a combination of passion and an ability to excite people to drive a vision. He said he regarded Apple founder Steve Jobs as the best chief executive he had worked with.

Schmidt exhorted Indian tech start-ups to ride the mobile wave. "Build applications for the mobile," he said. Every business in India could be run more efficiently by using data analytics, he said, adding this offered big business opportunities for start-ups. "New jobs will come from innovation."

Earlier in the day, Schmidt met President Pranab Mukherjee, Telecommunications Minister Kapil Sibal and Unique Identification Authority of India Chairman Nandan Nilekani.

Schmidt unveiled the 'Nasscom for start-ups' programme, under which the industry body announced plans to evangelise an entrepreneurial ecosystem for creating 10,000 start-ups in the country through the next 10 years.

Under the programme, early-stage start-ups would be offered funding of Rs 5 lakh to Rs 2 crore, three to four months of incubation/accelerators, co-working infrastructure at start-up clusters, and a start-up kit worth $25,000, comprising technology and business tools.

The programme would also help start-ups connect with potential customers, mentors and venture capital funds. In the first two years, the programme, supported by a clutch of information technology companies, including Google India, Microsoft India and Verisign, and angel investors such as Indian Angel Network, plans to organise about 700 ground events, seven business plan conferences and fund about 400 technology start-ups. Last year, 450 technology start-ups were launched in India, against 162 in 2006. The majority of these dealt with emerging technologies such as cloud/big data, education, social media and mobile. Bangalore and the National Capital Region accounted for a third of all technology start-ups launched last year.

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