I don’t know if it has been proposed earlier, but the other day I had an interesting idea about creating a variant of Turing Test and mashing it up in a Chataroulette kind of environment. As you may be aware, Turing test comprises of a game where a human chats with an unknown entity (which may be a computer or another human). The job of a human is to figure out whether the entity is human or a computer. It is proposed that if a computer passes Turing test (that is, if it manages to fool the human into thinking that it is a human), then we may call that computer “intelligent”. Unrelated to Turing test, Chataroulette is an online site where random strangers are paired up for chatting.

What if we mix Turing test and Chataroulette and then turn the whole concept upside down? Well, I think the consequences will be pretty interesting. Read on.

THE SETTING: An environment with multiple human and computer (chatbots) participants. A human participant is randomly paired with either a human or a computer.

THE RULES: Human has to convince during the chat that s/he is indeed a computer (chatbot)! After the chat is over (or during it), human can decide whether the other entity is human (who also makes a similar decision) or is a computer (which doesn’t make any decision). For a human, if the other entity decides that s/he is a chatbot, he wins 10 points and other entity loses 10 points. On the other hand, if a human makes a decision the other entity is a chatbot (and it is indeed true), s/he wins 10 points and chatbot (creator) loses 10 points. And if a human decides that chatbot is indeed a human, s/he loses 10 points while chatbot (creator) gains 10 points. In the end, the human or chatbot with most points wins the game (and a prize money?).

THE ESSENCE: So, every human in the game has to act like a chatbot while at the same time discern whether his chatting partner is an actual human (disguising as chatbot) or a chatbot (disguising as human). And every chatbot has to act like a human.

What makes this game interesting is the dynamics of chat and element of suspense. Imagine if you were in this game, you will suddenly start chatting in a goofy fashion (because you are emulating a chatbot). You won’t try to be too-smart (so that you are detected as a human) and you won’t try to be too-dumb (because you will be caught as an obvious deception). As a chat bot creator, you are not just relying on intelligence of your program to win the game. You’d also like to exploit the fact that a human will be over-cautious while declaring the program as chatbot (because humans also disguise as chatbot). So, the actual chatbot need not be a perfect chatting machine!

THE QUESTION: As a human, how do you win the game? What sort of conversation would you hold in this game to disguise yourself as chatbot? And what clues during the chat will tell you that the other entity is a chatbot?

I admit it: my previous (so called) “startup” Kroomsa was a failure. Back when I was starting up, I remember how game changing I thought it was. We wanted to revolutionize Indian music scene by inserting audio advertisements into music. We also vowed to donate 20% of proceeds from advertisements to a charity organization. Do you see how cool the idea was? Though this business, we combated piracy of music, made money for independent bands and helped society by supporting charities. All at once!

Except that we never made a penny out of the venture. First mistake: none of the team members was doing it full time. Second mistake: none of the team members had any experience in music industry. Third and biggest mistake: the idea was “cool”. To my hacker brain, this crazy business model was like dope. I distinctly remember being on a high for several days when I initially thought of that idea.

According to my then interpretation of “execution is important than the idea”, I started implementing the business model without doing any reality check at all. I built the music platform, roped in friends to help me, contacted a few initial music bands, uploaded music and added a dummy advertisement in songs! Before I realized my project was a startup. As time passed, I realized:

• Nobody likes to listen to advertisements in songs. In fact, people hated it. Lack of basic market research.
• Nobody in India likes to pay for music, let alone for independent rock music. Market was tiny.
• With no experience in music or corporate industry, we had no clue how to bring in advertisers. Lack of business and marketing plan.
• Finding good bands and signing them up was a non-scalable, extremely laborious task. So, our inventory of music was small. That meant even if we found an advertiser, our reach wasn’t so appealing. The chicken-and-egg problem.

Eventually we gave up on the startup when we realized: a) although we got covered in national newspaper because of the coolness of idea, it wasn’t exactly a startup; b) even theoretically, it will never grow big enough as a business (because market didn’t exist). In fact, even after months we hadn’t made even a single penny and there was no hope how it will make money.

In the process, my then 18-year old version learned the importance of business idea being grounded in reality. All this was extremely helpful when I founded Wingify last year. The first product is Visual Website Optimizer, an A/B split testing tool. Even though there are (or should I say inspite of) established companies in the market, the startup is making money and the revenues are steadily growing month-after-month.

Why is Visual Website Optimizer making money while Kroomsa didn’t? I think it boils down this:

The idea isn’t sexy. I am not going to change the world with it. But I am now solving a real pain-point in a big-enough market validated by presence of competitors. Since people are already paying for what I intend to offer, mine just needs to be easier, better or cheaper and the startup will make money and get customers. In short: I am making things that people want to pay for.

Yes, the phrase “make things that people to pay for” is worth repeating twice. Because I have now started making money with Visual Website Optimizer, my perspective on startup ideas has changed completely. A few years ago, my first reaction on getting a startup idea would be “Oh wow, this could be next Google. How do I get started implementing it?” Now my first reaction is on the lines of:

How will this make money? Who will pay for it? Is market big enough? And most importantly: do competitors exist?

So, next time you get a startup idea, ask yourself if established competitors (not other startups) exist in the market. If not, you better think twice because it could be an indication that the market doesn’t (or cannot) exist and you will never be able to make money in it.

Good luck with your startup ideas!

Imagine for a moment that you have created a new web app and after about 3 months of launching you are doing $2000 per month of sales. Would you consider yourself as a successful startup?

Well, you are already ahead of majority of startups which never get to see any revenue. So, in that way you are doing good. Plus if $2000 covers all your human and infrastructure cost, that means you have broken even and are doing really well. Is breaking-even the measure of success for a startup?

You certainly didn’t take the risk to earn just-enough money. Why would you leave your day job if your goal was to just break-even? So, this directly takes us back to our original question – when do you say that your startup is a success?

I believe answer to that question cannot be given in isolation. What startups need are benchmarks to compare. Knowing what other companies (in a similar position) are earning gives you a great perspective on your own revenues.

However, since startups are private companies, only the kindest of all share their revenue numbers. I compiled some of them in this post so that the startup community can benefit from it:

• Sales of Bingo Card Creator Per Month – ($4k/mo in sales) a single person, part-time effort over a number of years
• Pluggio Stats – ($1k/mo in sales) Twitter client, one man company
• WooThemes Mixergy interview – ($2million/year) 3 person company selling Wordpress themes
• Affiliate media Mixergy interview – (from $400 to $400,000/mo) single person bootstrapped business
• HotOrNot Mixergy Interview – (around $7 million in annual revenues in about 5 years from bootstrapping)
• Evernote revenue details – (around $400,000/mo, venture funding > $15 million)
• MetaASO: A Bootstrapped P2P Startup From India (doing $1 million in revenues annually)
• Upside – elearning startup (did $50,000 in sales first year, size of team: 20)
• BalsamIQ (did $100,000 in sales in first 5 months, single person startup)
• A Year in the life of KashFlow – Numbers and Strategy (£500k sales in 2009)

Another great general source of revenue numbers is Flippa.com where people buy and sell websites.

If you have other links or resources, please share them with me. Happy to include them in the list.

(I am currently looking for link to a blog post where a team collaboration bootstrapped startup shared its numbers – $5-$10k/mo, any one having a link?)

World is busy. There are millions of startups. You maybe cool. But so you tons of other startups. You aren’t special. People have their daily lives and problems. Why should they care about your startup?

Lack of a boss. Period. The lack of a higher authority to give you your next todo item is the single most-important factor that makes entrepreneurship so hard. In school, you have a clearly defined schedule and you have teachers who give you homework which provides something concrete to do everyday. Then they have exams, a definite end point of the whole yearly effort. In college, you have required classes, projects and exams that keep you sane and provide a safety net from being direction less.

In corporate world, your boss sets your todo list. Most likely, every day when arrive at your desk and check your email you have something definite to do, failure of which is likely to annoy your boss. Day after day, the todo list keeps you busy, happy and gives a clear indication of progress.

But entrepreneurship is different. You have NO boss. Nobody would care if you are slacking a bit, nobody would care if you failed to meet your targets, no body would care if your performance is falling month after month. Being self-motivated over a period of years non-stop is hard. Unlike corporate world, you have to set your own agenda for every single day and you have to meet self-defined targets. What makes it even more dangerous that there is no-one (expect you) to notice that you failed to meet targets. There is no-one to do a review meeting or feedback session. It is just you!

That is what makes entrepreneurship so hard.

1. Having an idea is easy (not a problem at all)
2. Creating a product is hard (development problem)
3. Creating an awesome product is even harder (execution problem)
4. Having people notice it is real hard (marketing problem)
5. Making people use it is very, very difficult (credibility problem)
6. Generating cash out of it is simply not doable (sales problem)
7. Generating money and being profitable consistently is impossible (business creation problem)
8. Having successful multiple product lines is you-must-be-out-of-your-mind (successful business creation problem)
9. Rejecting acquisition offers is way, way harder (because it is tempting and odds are that you will never reach till that stage)
10. Doing an IPO is the ultimate hardest but simply awesome

I just thought of sharing a technique I have been using lately for collecting knowledge on target industry or a new tool/startup idea

For example, you have been trying to something in online backups (a purely hypothetical example).

First, come up with top 3 relevant keywords that people search for while thinking of online backups. You may use Google insights for search.

Here are the relevant keywords I found: “online backups”, “data backups”, “server backups”

Now here is the juicy part. Go to Twitter search and for each of your keyword, search on following themes:

• What people like: search combination of keyword with words “like”, “love”, “great”, “cool”, “:)”. Example – “online backup” “love”
• What people dislike: search for “hate”, “sucks”, “:(”, “bad”, “worst”
• What people want: search for “want”, “wish”, “if only”, “lacking”

This will give you a pretty good idea of what people like, dislike and want in this particular industry. And if you spot patterns, you could have tremendous insight.

Further exploration:

• Expand your set of keywords
• Do the same three sets of searches for competitors/leaders in that industry
• Don’t just limit till Twitter, do Google blog search also

Any more ideas? More terms for searching likes, dislikes and wants? Now if someone could just make an app for simplifying this. Anyone?

The single biggest problem with entrepreneurs is that they have a very tightly knitted community. Yes, you read that right: being part of a tight community around entrepreneurship (especially Internet and technology startups) could be a barrier to moving ahead towards success. This might sound bit controversial but allow me to explain.

Most likely, entrepreneurs visit discussion forums dedicated to entrepreneurship. They have entrepreneurial friends. They consume entrepreneurship gyan day and night on how to succeed, what to do and what not to do. When they have difficulty, they take advice from like minded entrepreneurs who understand them. In short, lives of entrepreneurs revolve around experiences of other entrepreneurs only.

But, my friend, entrepreneurship circle is a very tiny part of this world and probably mutually exclusive from your target customer segment. Your customers don’t frequent the blogs, you do. They don’t participate in the discussions you like talking about. Moreover, your entrepreneur friends know no better about your target market than you do. All they can do is to provide their point of view, which may or may not apply to you because there are so many variables when it comes to startups, customers and target market.

While, if done in sensible limits, participating in entrepreneur community can be very fruitful. You get to learn from other’s mistakes and successes. But, more often that not, entrepreneurship circles become echo chambers where same point of view keeps repeating again and again and takes a life of its own. And the entrepreneurship circle is so small and tightly knit, that you might mistake it as truth. Reality is that your customers are not even aware that such circles exist. How many of your potential customers might be aware and frequently visit forums such as Hacker News, Techcrunch, Mashable, Reddit or (in India) Pluggd.in? They don’t hold the same opinions that get reinforced in such circles.

So take a dose of reality and understand that these entrepreneurship communities exist for a different purpose and the advice, tips, feedback you get should be seen in the context that all people there probably think like you do, have low budget and represent a tiny fraction of this world. Don’t take all of what is said as reality. Reality is what your customers tell. Every second spent in such circles can be spent talking to your customers and finding their circles.

Do you agree with my point of view? Do entrepreneurship circles help or hurt?

PS: I understand the irony of automatically generated related posts below. But my point is that the entrepreneurship community participation should be done in right context and the advice there should be seen in proper light of where the person is coming from.

What do you do if you feel you are born unlucky? What do you do if you feel that the whole world is conspiring against you to make you not succeed? And, what do you do if you feel you have less intellect, less resources and less everything to succeed?

The short and sweet answer is to work harder. You cannot control luck. You cannot control amount of financial resources you have. But what you can definitely control is the amount of effort. Your competitior or neighbour might be advantaged in all respects but you can compensate all that just by working harder.

Really, putting in a lot of effort gives you a lot of chances to make mistakes, try out things and fail. What you have to loose here is your effort, which of course you must have unlimited supply of.

If your nearest competitor or neighbour works X hours, you must work for X+1 hours. If he pitches to Y bloggers, you must pitch to Y+1 bloggers. Of course, you cannot match him in his $5 million funding and a huge team of sales guys. But what you can match (and even exceed) is your persistence and sheer drive to succeed.

Yep, I know it is sounding a bit like self-help bookish type, but I have observed and realized that success is an equation with a lot of variables. Most of the variables you have little or no control on but one variable which has a lot of influence on the result is effort and persistence. Controlling the value of this variable is entirely upto you and hence affecting chances of being successful is your will.

What are your thoughts on this? Does hard work really increases the probability of success?