Tips for Startup Founders dealing with Investors
Uber's Kalanick gave a few tips to founders at IIT-B when dealing with investors.
Economic Times reports that Travis Kalanick, the CEO of Uber, likened entrepreneurship to a game of chess where founders and investors square up on opposite ends for a battle of wits. Speaking to a crowd of over 3,000 at the Indian Institute of Technology-Bombay, Kalanick, 39, exhorted founders to stay "five or six moves ahead of your investor".
Uber, now valued at an estimated $61 billion, has raised over $ 8 billion in 13 rounds from 52 investors. Those backing the startup include China's Baidu and investment firms. "Being an entrepreneur is like playing three dimensional chess; you play chess 80 hours a week," said Kalanick during an open-house discussion moderated by Ronnie Screwvala, the founder of Unilazer Ventures.
Cheered on by the crowd at the alma mater of his main India rival Ola's cofounder Bhavish Aggarwal, Kalanick had tips and tricks to share on how to manage the often fractious relationship with investors. "When you are not doing well, the trick is to not answer your investor right away; sit on it (email) for 2-3 days," he told the assembled crowd. "The worst thing you can do is instantly reply and explain your chess game."
Uber, which counts India as one of its most important markets after the US and China, is vying for leadership with SoftBank-backed. Kalanick, who once spent time coding for a startup in the southern city of Thiruvanathapuram, said two is company when starting up. "Don't have six cofounders. You will basically have six-hour meetings about the colour of your pen," he said. "If you do it alone it's going to be incredibly lonely, two is ideal." Kalanick teamed up with Garrett Camp to set up Uber in 2009.
Burning large amounts of cash to acquire market share is a part of the game, Kalanick said, but eventually companies exist to make profit and they must not forget that. He credited the Chinese with coming up with the tactic of swamping a market with cash in order to win customers. "Subsidies and large burning of cash is a Chinese invention and it's a pretty interesting innovation," he said.