Thursday, March 6, 2008

Viral Entrepreneurship - Its what we need in Oregon

I am on the board of a recently formed organization called TIE Oregon. TIE stands for "The Indus Entrepreneurs". It was founded in the early 1990s in silicon valley by engineers and budding entrepreneurs who represented a region called Indus or the Indian subcontinent. TIE spawned many successful startups in the silicon valley, including, and Exodus. Many of these companies have changed the landscape of user experience on the internet and some of the founders like Ram Sriram have helped form giants like Google. The founders of these successful companies have in turn bankrolled other companies creating a viral frenzy.

This evening we organized an entrepreneurship event in Hillsboro where two entrepreneurs were invited to talk about their experience to a group of Indian and non Indian wanna be entrepreneurs. They included Manish Chandra, CEO of Kaboodle based in Sunnyvale, in the heart of Silicon valley, and Caroline Cummings , CEO of OsoEco, a Eugene based company focused on building an online community of "green" solutions including products, services and living. OsoEco recently won an award at the Angel Oregon conference in the sustainability track. It has raised $370,000 in private capital and received $60,000 from Angel Oregon.

Both these founders had an interesting and inspiring story to tell. OsoEco is a nascent startup still beta testing its website. Kaboodle is barely 3 years old. Kaboodle was formed sometime in 2005. By early 2007 it had raised and burnt $5 million in its "Series A" funding. It had a 2 million a month unique visitors presence on its website. The funds were exclusively raised from high net worth Angel-Capitalists, some of who like Ashish Gupta and Kanwal Rekhi were members of TIE in silicon valley. Their investment caused others like Ron Conway and to invest. One investor according to Manish invested $600,000 because he had made $600 million on a $600,000 investment in another "Chandra", who founded Exodus.

While raising money from angels, Manish struggled for nearly a year to raise capital from traditional Venture Capitalists in silicon valley - a must for success. When he finally did find a firm from the east coast interested in investing, Ron Conway, an early investor in Google and Facebook, made a few phone calls and within a week Hearst Corporation purchased Kaboodle for a rumored $40 million from right under the VC's nose. That is an 8 times return in less than 24 months! Kaboodle bucked the trend and now is considered a poster child for startups that can succeed and get significant returns without traditional Venture Capital. Not $600 million but I am sure the $5 million or so was a great return for the "Chandra" investor in a very short period of time.

Kaboodle is now helping Hearst figure out how to make online advertising more effective for its customersi in the online world. Social networking is the next revolution in e-commerce and online shopping. Manish is a classic silicon valley success story. He came to the US from India as a student. He decided to stay back in the silicon valley on an H1 visa to work for a large technology firm like Intel as an engineer. He likely worked long and hard and finally broke the glass ceiling by getting an MBA and working his way up into management. He then tried his hands at a few startups till one day when he got inspired by an idea and finally took the plunge.

The difference? Unlike the past he had TIE Silicon Valley on his side as a catalyst. Other entreprenuers who had a tougher struggle in the 80s and 90s were now available to him as mentors and investors to guide and support him. I call it viral entreprenuership. Success breeding success at a much larger scale. I am sure there are hundreds if not thousands of success stories like Manish in silicon valley who have achieved rapid success through mentorship and access to capital.

Both these companies strived to attract a community of users on their website by using social networking around niche interests to attracts advertisers for revenue. The contrast is that one is in silicon valley and one in willamette valley. Its heartening to see OsoEco charging ahead with two bright young women as founders. Caroline is charasmatic, a true entreprenuer with a great presence and witty humor. She has made some success by raising a small amount of capital.

In contrast Manish used his TIE connections in silicon valley to take a niche idea and converted it rapidly into success story by getting decent investment capital to build a business. He was able to get an 8X return for his investors in two years. Can OsoEco replicate this success story as a startup based in Oregon? I think its possible if we could replicate the viral enterprenuership that exists in silicon valley.

As the chair-person of its mentorship program I think TIE Oregon can be a key catalyst for such a viral entreprenuership. All of us who are involved in this local chapter want this to happen in silicon forest.

So if you are an Oregonian, or wanna be Oregonian, an entreprenuer or wanna be entreprenuer - if you have an idea that can be brought to market, please visit us at TIE Oregon and become a member. We are open to all colors, culture and background, though are roots are Indian or Indus. Attend our events and become part of this viral movement. Join the mentorship program and let us help you in your success and breed future success!

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