You know Kondratieff's theory, as well as the next person, and have read your Drucker. But really, what is this innovation business?
It had started out as The Indus Entrepreneurs in 1992 with the name 'TiE' being symbolic of the South Asian or the Indus roots of the founders. Over the years, TiE has evolved to stand for Talent, Ideas and Enterprise which, by the way, is what its current moniker is. Vish Mishra, venture director with Clearstone Venture Partners and president of TiE Silicon Valley, and Kiran Kini Malhotra, executive director of TiE SV, sit on the round table with Techcircle.in's contributing editor Sudarshana Banerjee at the TiE Silicon Valley headquarters at Bunker Hill Lane, Santa Clara. Vish talks about the business of innovation and the entrepreneurial ecoscape in India and the USA. Kiran tells us more about the TiE Angels. Sudarshana concludes the session. We distil some of the key notes from the discussion for you.
SB: There is no dearth of talent, and there is a burst of entrepreneurial energy. But lets face it, the Indian ecosystem is still extremely difficult to foster technological innovation. Vish, could you share your thoughts on this.
VM: For a country of 1.2 billion people, how many IITs do we have in India? How many graduates do they produce? How many of those engineers stayed in India? They get their education in the taxpayer's expense, but find their way to the US and other places because they can not get a similar level of opportunity in India.
Entrepreneurship needs an ecosystem - of financial means and a strong support system. Individuals need the freedom to pick and choose, the freedom to be funded. Talent plus attitude plus hard work becomes meaningless, if the right environment is not available. Think of a farmer. If he does not have access to fertile soil, even the best quality of seeds, watering, and tlc (tender love and care) will not yield a crop.
India needs to improve its infrastructure. There are significant hygiene and sanitation issues. People don't have a choice but to be occupied with the challenges involved in the daily business of living; this is not the kind of environment that promotes entrepreneurship or innovation.
Major corporations in India are not investing as heavily into R&D as their foreign counterparts. Research labs do not have adequate funding.
The wave of innovation in India is recent - say 20 years old. We are many, many years behind in India. It is going to take us a long, long time to catch up; but the good news is that the country is absolutely on the right path.
SB: We hear a lot about immigration reforms. Everybody, from Bill Gates to Mike Bloomberg, and of course, Barrack Obama is talking about this. What is going on?
VM: See, US has a deep, strong shortage of technical talent, the precise reason why the H1B visa came about. There was this shortage 40 years ago, and there is still a shortage today. We need people with scientific or engineering backgrounds, especially those with strong technology and math skills. America celebrates entrepreneurs as heroes unlike any other societies, and at the end of the day, these people are helping American businesses do better. Unfortunately, the problem is people abuse the system, and a lot of nonsense keeps going on.
If the Staple Act came to pass, you could make sure the brightest and best kids kept coming to the US, and stayed here after they finished school - making it easier for employers here to recruit the best talent. (The Staple Act was sponsored by Arizona Representative Jeff Flake. It proposed to amend the existing Immigration and Nationality Act to authorize students who have earned a Ph.D. degree in the US in science, technology, engineering, or maths to be admitted for permanent residence. This bill never became law).
SB: We just read Microsoft co-founder Paul Allen say how he got burnt innovating just for the heck of it. How is innovation in business different from innovation as a function of creative outburst?
VM: Innovation in business happen when you identify a specific problem you want to address, and focus towards solving that problem in the best possible way. Innovation just for the sake of innovating, because you feel like you have to innovate, does not work.
Once you identify the area you want to work in, maintain a steady focus. The focus towards the problem has to stay fixed, or else a lot of effort is wasted. (A lot of our readers have seen how disastrous 'requirements creep' and shifting goals can get).
Don't make innovation a multi-variable process. Most innovation is not complex. Focus on one very simple way to do something. Do not involve too many things; if there are ten or fifteen things that have to fall in place for your solution to work, the failure probability increases in multiples.
Experiment fast, decide fast. Start fast, fail fast. (In a slightly different context, Carly Fiorina would say 'perfect enough, fast enough'). If you are too cautious, you are starting slow, which is bad. If you think whatever you are working on is not working, move on. Don't think, I can't fail, and continue with something that will not work. If you tried and failed, but tried genuinely, that is okay.
We are all born equal; but fact remains individuals with equal access to opportunities do not always perform equally. Identify what you are really really good at, and focus on your specific talent. Do not try to think about ten other things you also have to do, and get frustrated because you can not do them as well.
Ultimately, good innovation has to connect to the market. It has to result in commerce or increased business.
Anecdotically, TiE members have created a quarter trillion dollars of value worldwide since its inception, and innovation played a key-role in the value-creation process.
SB: The TiE Angels program has around 100 angels, and has been funding on an average a company a month since its inception. Kiran, could you share some details with us.
KKM: TiE Angels, was launched in July 2010. It is an angel investment group formed by charter members of TiE Silicon Valley. (Charter members are successful entrepreneurs, corporate executives and senior professionals, and inclusion in this exclusive club is by invitation only).
There are currently around 100 investors in TiE Angels, and more than 40 people have already invested. These angels are all 'accredited investors.' (As per Securities and Exchange Commission (SEC) requirements, only accredited investors are eligible to invest in certain types of investments which are considered high risk, hedge funds, for example. These are high net worth individuals, who satisfy certain income and asset prerequisites specified by the SEC). The angels are investing in their personal capacity.
TiE does not run a fund, and does not itself make any investments. These investments work just like any other investment; and the investors are in no pressure to make any commitments, nor are the applicants allowed to solicit for funds.
TiE can be involved at every step of the process - right from facilitating seed investment to helping with deciding on the exit strategy. After the initial investment, the goal is to take them to institutional investors for subsequent rounds in a year or two, as the companies grow and need more capital. At this stage there is a lot of competition, and a lot of companies are not able to raise capital in subsequent rounds of financing.
TiE Angels are looking to fund companies that are really serious, really promising, and have gained some traction or have raised some money. The idea is not to give $50,000, because that kind of money will not last long. The exact amount is decided on a case by case basis; but companies can expect upto a million dollars in capital, though we have not given a million dollars to a single company yet.
So far ten companies have been funded, and the number is expected to go up, as applications come in every day, and evaluations and discussions keep happening.
SB: There are guns, germs and steel; and then there is IT.
Over the years, as Vish pointed out, TiE members have created about a quarter trillion dollars worth of value. How much is a quarter trillion dollars? Just to put a perspective to the number, it is more than the current market cap of Google, Microsoft, or IBM.
If you have Java on your machine, and you do, then you have Vinod Khosla, co-founder of Sun, and a TiE charter member and mentor to thank. Why can't we have a company like Sun or a Google started in India?
Out of a population of around 1.2 billion people, how many Bill Hewitt and Dave Packards have we lost because they did not have access to primary education?