Speaking of Wealth, today, focuses on the value and variation of incubator services. Jason Hartman speaks to Sramana Mitra, the Founder of One Million by One Million, who talks about what it means to be a part of a global virtual incubator and just what membership can offer you and your company to promote and stimulate growth in such an unstable world.
01.50 – Sramana Mitra explains what sets One Million by One Million apart from other incubator services.
06.00 – Don’t be one of the 600,000 entrepreneurial businesses that falls apart every year.
06.48 – Take advantage of the chance to get involved with weekly online entrepreneurial seminars.
08.55 – Even if you don’t fit into the 1% of being fundable, all is not lost.
11.30 – In a world where networking and knowing the right people is so vital, getting involved in a large, evolving community can only be a good thing.
13.33 – Every year it seems that more businesses are being created to help ease the logistics of starting your own business.
16.28 – For more information about One Million by One Million and to access all of their free services, head to www.1Mby1M.com
Are you doing what it takes to avoid entrepreneurial mortality?
When dealing with equity, never give away ownership of your company lightly.
Naivety: Thinking that entrepreneurship is just about having a good idea.
This show is produced by the Hartman Media Company. For more information and links to all our great podcasts, visit www.HartmanMedia.com
Speakers, publishers, consultants, coaches and info-marketers, unite. The Speaking of Wealth Show is your roadmap to success and significance. Learn the latest tools, technologies and tactics to get more bookings, sell more products and attract more clients. If you’re looking to increase your direct response sales, create a big-time personal brand and become the go-to guru, the Speaking of Wealth Show is for you. Here’s your host, Jason Hartman.
Welcome to the Speaking of Wealth Show, this is your host Jason Hartman, where we discuss profit strategies for speakers, publishers, authors, consultants, coaches, info-marketers and we just go over a whole bunch of exciting things that you can use to increase your business, to make your business more successful and more and more passive, more and more automated, and more and more scalable. We will be back with a great interview. Be sure to visit us at www.SpeakingOfWealth.com, you can take advantage of our blog, subscribe to the RSS feed and find many other resources for free. That’s www.SpeakingOfWealth.com, and we will be back with a great interview for you in less than 60 seconds.
It’s my pleasure to welcome Sramana Mitra to the show, she is Founder of the One Million by One Million global virtual incubator, and she’s the author of Bootstrapping With a Paycheck: An Entrepreneur’s Journey. Sramana, welcome, how are you?
Thank you, it’s great to be here, Jason.
Yeah, it’s good to have you. So, a virtual incubator.. Now, many of my listeners are familiar with some of the bigger incubators like Y Combinator and as I mentioned to you a moment ago, I was recently at Techstars in Boulder, Colorado, which was a fascinating tour and visit. Tell us how a virtual incubator differs from these.
At its simplest, a virtual incubator does not have physical space, so our philosophy is that physical space is commodity. People are starting companies in their homes, apartments, garages, kitchen tables, everywhere! We don’t require that you have to be present at any place specifically. If you want to join Y Combinator, you have to move to Silicon Valley for the duration of that membership, and that’s just not viable for most people in the world.
Our philosophy is that we will work with you wherever in the world you are. We’re the first and only global virtual incubator accelerator in the world and otherwise, we provide all the the functionality in terms of guiding you through the process of building a business.
That’s one differentiator. The other thing is that all these programs: Y Combinator, Techstars are very, very exclusive. They really take pride in how many companies they reject. Our philosophy is that we are an inclusive incubator and accelerator; our philosophy that we take pride in is that we do not exclude anybody and we do not reject anybody, as long as you’re working within our domain of expertise, which is IT and IT-enabled services.
Now, this is very important because if you look at the world entrepreneurship scenario, over 99% of the ventures that go out to seek financing get rejected. A lot of it is for good reasons – companies will seek financing too soon in their history and in their evolution; companies also go out to seek financing without fully realizing what is venture-financeable. Venture capitalists are looking for these hyper fast-growth companies and very very large available market opportunities, and most businesses out there actually don’t fit those criteria. They’re working on small range businesses. Maybe they’re going to be 5 million, 10 million, 20 million dollar businesses, but they’re probably not going to be billion dollar, multi-billion dollar businesses, which is the domain of venture capital.
And when you give those numbers, by the way, are you talking annual sales, valuation? What do those numbers mean, by the way?
We’re talking revenues and valuations etc. 5 million, 10 million, the numbers I was talking about were revenues.
Okay, got it. Go ahead.
Now, the problem here is that a lot of these businesses are perfectly viable businesses, but the whole incubation acceleration system of the world is ignoring them. They’re all chasing this less than 1% of businesses that are venture-financeable and as a result, there’s this tremendous economic value that is essentially going untapped. Then we have 7,500-8,000 incubators and accelerators around the world and they’re all trying to force all of these companies into this venture financing mode – most of them are not financeable. It is a big mess.
That’s very interesting. I’m curious – what happens to these entrepreneurs? They’re not a fit for Y Combinator, they’re not a fit for Techstars, they’re not a fit for the other ones. What happens to them? Do they ultimately just bootstrap it themselves? Say you weren’t there in the marketplace..
That’s exactly where we are trying to do our work – it’s to be this inclusive solution to the problem of entrepreneurs not being able to access help.
I understand that. What I’m curious about, though, is what did they do before you? What did they do? Did they give up?
Before us? They tried to do it themselves and the vast majority of companies try to bounce around and figure things out as they go along because they cannot access help and there’s an enormous entrepreneur mortality – over 600,000 businesses die in the vine every year in America.
Yeah, this is great. So tell us how the model works. Maybe an entrepreneur has an idea, or they’re already working on it and already into the sequence of launching this business and they hear this show – what is the business model for you?
First and foremost, I would like to invite your listeners to come and check us out at our free, online mentoring sessions. Every Thursday morning at 8am Pacific Time, we host an online mentoring program and this is essentially a web seminar that entrepreneurs from all around the world dial into, and we put somewhere between 3-7 entrepreneurs in interactive mode. I anchor the show and I coach them in real time. A lot of it is case study-based learning so you learn by picking your business. You also learn by listening to other people’s speeches. This has been going on for a long time.
We have done 241 sessions of these mentoring programs. We’ve had over 25,000 people participate in them, so this is something that is well established and a lot of entrepreneurs are using it as a free source of feedback, guidance, advice, mentoring etc.
Beyond that, we have what we call the One on One Premium Program, which is a $1000 annual membership fee, for which you get our full range of acceleration and incubation services. That includes our fabulous curriculum – we’ve had over 600 successful entrepreneurs participate as case studies where they have come and sold their stories, their entrepreneurial journeys and their lessons from the trenches and their advice and so forth. We’ve stitched all this up into a very powerful video lecture and case study-based web service and digital curriculum. We also have private versions of this online mentoring that I described earlier for our members only, and then we make introductions. We have a tremendous Rolodex and we introduce our entrepreneurs to potential customers, channel partners, investors, media analysts, advisers, mentors, whoever can help them progress and advance their mission of being successful entrepreneurs. Then we also work with the media quite a lot and get them good coverage.
Fantastic. Publicity and so forth. Okay, great. So that’s a great model. Do you, like some of the incubators, ever fund these businesses? The Y Combinator model is a very small amount of capital, so that’s one question. Go ahead.
We work with a lot of investors, we have a large network of investors that we work with, so we make introductions to investors. Don’t forget, we don’t only work with the less than 1% fundable businesses. We also work with a very large number of businesses that don’t necessarily fit the venture model – what we call ‘the other 99%’. This is a segment that needs to be self-financed or bootstrapped, so we have a whole series of creative techniques of bootstrapping and self-financing and just building businesses and building strategies. We teach a lot of business strategy, how to navigate, how to close deals, how to build tunnels – all the sorts of things that help them build up customers’ revenues and profits.
Okay, good stuff. So the answer to the capital question..
We make introductions. To the extent that you are fundable…
Not your incubator, though. Do you take equity, like some of the other incubators?
We do not take equity, no. We are actually credibly entrepreneur-friendly because part of the problem that’s going on in the industry right now is that if you are going to an incubator or an accelerator and you are parting with 15% equity in exchange of $15,000-20,000 in investment, then by the time you go through more financing, your ownership in the country is really diluted. It’s a terrible deal. If you’ve already given away 25-30% of your company for less than $100,000-150,000, your ownership structure of the company is really screwed up.
We looked at all that and decided that everything that we offer will be done without taking any equity. The $1000 annual membership fee is the only fee that we charge and it’s all designed to be scaleable, for vast numbers of entrepreneurs to be using our services. If they choose to raise financing, we want them to be able to have a clean cash table and a clean ownership structure so that they can raise money without diluting too much.
That is a fantastic model. I think it would be very, very attractive to entrepreneurs. How many do you have now on your system?
We do not disclose how many Premium members we have, but our community is over a couple of hundred thousand, so it’s a very large community that we cater to and at many different levels including, as you know, we do books. We have done a dozen books and we do these free mentoring sessions when we have the Premium program. We have a blog that is very, very heavy with content, we do a lot of social media content. We basically cater to this community at many, many different touch points and many different levels.
Fantastic. And what types of industries? I know you said it earlier, but you do have a fairly narrow industry angle, right?
We do have a very, very focused industry expertise, yes, so it’s all information technology and information technology-enabled services. We have web and e-commerce as one particular category where we do a lot of work – these are all web businesses, and we have cloud computing and business solutions, so anything to do with software service and infrastructure service; all kinds of business-to-business services. We do a lot of mobile and social apps, and then we do have specific categories which are very active right now. After the healthcare stimulus, that industry has really kicked in gear and we see a lot of that. Online education is a popular category these days where we do a lot of work. Gaming [is one], outsourcing and consulting continues to be a popular category for small businesses to build value around. Everything around the general IT and IT-enabled services framework.
We don’t do very capital-intensive stuff like semi-conductor equipment or chips or biotech, cleantech – these are not within our overview.
Right, right. And that makes sense. That wouldn’t be a fit for you. Okay, good. What would you like to tell people about entrepreneurship just in general? I mean, it can be in terms of the landscape out there. It seems like a fantastic time to start something because the cost of starting a business has plummeted with all the free software and cloud platforms now. It’s just amazingly inexpensive.
Absolutely. It’s amazingly cheap nowadays to get something off the ground, and there’s incredible facilities available. Because of cloud technology, you can use technology very heavily. Cloud has made technology available very cheaply and very readily for small businesses, and that makes running a business very simple. Then there is this huge mass of outsourced resources that you can access as a small company – services like oDesk and Elance, where you can hire people from all over the world and run these incredibly efficient virtual corporations. We did one ourselves – we actually have people from all over the world (in India, in the Philippines..) we’ve had people working for us from various parts of the world, which makes it both affordable, and you can access skillsets and capabilities very readily, which was not so easy to do before the last 10 years or so.
It’s even become more and more easy and more and more smooth over the last 5 years, I would say, so it is very very convenient nowadays, because of all these available facilities, to start something. Nonetheless, I would not misrepresent to anybody by saying that entrepreneurship is easy. Entrepreneurship is hard, it takes incredible persistence, resilience, commitment, stamina and nerve to be successful as an entrepreneur, so this is not for everybody.
If it’s something that fascinates you and it’s something that you really want to take a crack at, it has become a lot easier to get things off the ground.
Absolutely, very good. Any advice that you can give to aspiring entrepreneurs?
You know, my advice and inspiration is to come and start using our free services. We provide an incredible amount of service for free, and just start using them and the advantage there is that you start working in a community and a support group that will prop you along, because there is an emotional aspect to this.
Yeah, there definitely is an emotional aspect and staying persistent and persevering in the face of incredible odds sometimes is very important and key to success as an entrepreneur. Very good advice. Give out your website one more time so people know where to find you.
Fantastic. Thank you so much for joining us today.
My pleasure, thank you for having me, Jason.
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