I was reading a very sad, frank, and wise notice from Russell Beattie about the death of Mowser, his mobile browser project. I know, and you know, that most startups die young, the ones that don't mostly become zombies living on consulting, and the small remaining percentage are bought for peanuts by larger companies lusting after their IP and management team.

But it is still sad.

And before anyone misconstrues anything I am about to say, I've been there, so I am very sympathetic.

The Aftermath

I think Russell can say it better than I can:

Seriously... A salary will be a good thing to have again. I'm *thousands* of dollars in debt to my family and friends, maxed out on every credit card (all of which are in collections), on my last chance for my apartment (if I bounce one more check...), had my car repossessed *twice*, electricity turned off, cellphones switched off, landline canceled outright, and on more than one occasion (this weekend in particular) eaten little more than buttered macaroni as I waited for an overdue PayPal deposit to arrive (3-4 days? Come on!). Having a steady income will be a welcome mental break, believe me.

So, here's the thing, did he make a mistake or, even in hindsight, was this the right way to fund his company?

VC or Credit Card Debt

Well, that's the question, unless you're Guy and have been rich and famous for so long you forget why.

There is no answer. I know that's all very Yoda, but there it is.

The Third Way

Jeff Bezos is supposed to have sat down and gone through all the different items that could plausibly be purchased via the internet (pet food: no) and settled on books.

My last startup we went though a host of things we could startup that had serious FY money potential and that could be started while we were still consulting and earning our basic dough.

You see, we'd both done it the VC way and the credit card way and, since we didn't like the outcome of either, we went for the third way.

India

If I wanted to start a company without going into debt and without selling my soul to a VC, I'd go live in India and insource my project. 

A good mid-level manager who was willing to move to India could easily make $50K USD, which is the equivalent of $400K in SFO.

Take your partner with you, share an inexpensive room. You now have $70K to play with to hire technical people.

Which, in the good old US of A might get you a semi-palatable Flash programmer, but in India one can get a very good technical programmer for $15K.

Bootstrap four or five good programmers and be there to supervise them.

Plus, should things go badly, as they likely will, you now have an impressive resume to take home to the US.

You can rinse and repeat this process in China or Vietnam if you like, but I prefer curry to eel.

Keep A Stiff Upper Lip

Personal advice to Russell and everyone else swimming in the dead pool - it's all very survivable, and likely you'll take another run at the brass ring. I did, and I believe you can catch it if you work hard enough.

I've been travelling with my family up in French speaking Canada so, of course, customer service and communication are in the forefront of my mind.  For those of you who look North and see a mirror, let me assure you that in the central right hand part of Canada you'll get a chance to practice your French.  Your 18th century French, but still.  So, to summarize, I got on an airline with a buncha kids AND landed in a country where the primary language and culture is French.

Communication

Fewer than 20% of the people I've needed to deal with have spoken no English, but at least another 40% have had very limited English skills.  How do I know they aren't just 'pretending' to speak only French?  Well, I have approximately 100 words of guide-book French memorized and that is usually enough to drive any Gallic waiter in a haughty two star Paris 'straunt into instant perfect English.  I assume that the same holds true in Canada.

The problem here is that I am dealing with people in the service industry: hotels, full-service gas stations (remember those?), bakeries, etc.

It's as if a high tech company took their customer service and outsourced it to a country where English was a second language.  Like, say, Chennai or Bangalore.

Startling Realization

It's would be pretty easy to get an executive at HP or GE to reconsider offshoring customer service by taking them to old Quebec City, pointing at a shop and telling them to get directions to the Funicular.  Then ask them to imagine my mother trying to figure out how to unjam her inkjet with the help of Prashant in a noisy call center.

But We Do It Too

We recently released the Yahoo Store SEO Analyzer and one of our beta members dropped a mention into the excellent Y!Store Forums.  As you might imagine, a LOT of people showed up to try the tool and some of them had some interesting problems that we just hadn't found in testing.

Instead of having our techie guys hop on and answer the questions in gruesome and excruciating detail, I made them explain and show me what was going on so that I could explain in a useful fashion.

Free Customer Service Isn't

It costs money to have your offshore guy deliver the service, and in the short/medium term it is probably cheaper than having someone in a square state deliver the same service.  And I am sure that some bright spark MBA can come up with a chart showing that in the end the lower customer retention actually drives profits.

But, frankly, baloney.

It's not free to spend $1.25 to not solve a problem for a consumer rather than $4.50 to actually solve it.  And then lose a customer. I could probably prove the opposite in a spreadsheet too (after all, I have gotten VC money) but anyone in the real world knows it is false as can be.

Results Count

My mom will never buy another HP Inkjet printer again, she's so scarred from that call.  Now, she's a bit long in the tooth and all, but I figure that is 8 printers that HP won't sell.  Plus when we went to get her a new laptop there were no HP products in the mix.  Ooops.

Her wireless printer adaptor died (power surge) and she went and got a new one.  (My mom is not a techie, but she can usually follow directions - clearely a trait that skipped a generation!)  Of course it did NOT work out of the box so she had to call customer service  - this time she got someone in Manila.  Same weak English.  But well trained - he carefully walked her through each step, and when he couldn't fix it (her WAP was set to secure) he passed her to somebody in ... Russia.  They quickly determined the fix and walked her through it.  In the end it took 75 minutes, but all offshore time.  She is now a huge fan of ... Cisco.

The Bottom Line

You can temporarily boost the bottom line by not providing "free" customer service, but in the end it'll simply cost you money.  My simple suggestions, all of which require upfront investment but can be executed with the losest cost resources availabe:

• Recognize that free customer service can be a cost or a profit center
• Training is critical
• Documentation is necessary
• Set customer expectations up front, especially for complex products

It's really not rocket science.

We've talked about why you wouldn't want to outsource to Amazon (and were proved right when they went down hard recently) but when Aaron wrote an excellent article on The Future of Business Process Outsourcing I thought it might be good to give a (slightly) dissenting opinion.  He makes a lot of very good points about the hardware and software side of outsourcing, but I think he kind of runs off the rails when he looks at the opportunities and people in India.

Aaron's Complaint

It's a long article, and worth reading, but he's basically frustrated because it is hard to find people who will tackle what I'd call small(ish) projects - things under, say, $250K per major piece.  I'd agree, but then again we have a shiny technical group, so we do all that in house.  But one of his observations is that this is really hard stuff to send to India.  I'd really agree with that.  A 5 person three month development project can't be green-fielded to India. The overhead of getting it running and the risk simply do not make it worthwhile.  However, if you have a larger project ($500K budget) then you'll definitely be able to invest in India and get a tremendous time/money boost.

Our Background

In a previous life Don and I had a technical team (7 total) and a business process team (60 total across 3 shifts) that handled internal operations for a very large multinational.  We spent three years building the group from scratch and it had several key distinguishing factors that made it different from the average "outsourcing team" in India:

• 2% annual turnover
• Promotion from within
• Promotion of females to management positions
• Fresher training plan

Rocket Science

It ain't.  You can't run a group in India like you would one from the US, but they're still people struggling with Maslow's Hierarchy, though perhaps with some different ordering.  I mean, really, if you haven't looked at that picture in a while, then look around the categories, think about the people you've worked with from different countries and cultures - you'll be shocked at what you can fit in there.  (The real beauty of being an academic is that if you're the first to write down something obvious you are famous forever.)

(Those of you familiar with India will appreciate the color coding!  And, no, I'm not going to explain that joke if you don't get it.)

So let's just assume that you are having regular team meetings, offsite team building exercises, reward dinners, and all that jazz that you have to do with remote teams.  Let me give you a

India Specific List of Success Factors

In no particular order:

• Have a real presence
  • Show up often
  • Plan for the long term with facilities and equipment
• Work type is important
  • Don't try to outsource small stuff
  • Start with smaller projects, with closer deadlines, and with lower risk and complexity levels.  Your Indian team needs to succeed and learn how to work with you under good conditions rather than while flat out and scared.
  • If you don't understand what you want the project will fail
  • No customer facing activity, even internal customers
• People are key
  • Hire someone in the states who has built a team and succeeded as it is too expensive to make a mistake
  • Hire a manager in India who has successfully managed for an American company
  • Hire expensive high quality high level people - there is little cost advantage (3:1 maybe) there because of shortages but they are critical to getting leverage from large teams of freshers (10:1) and juniors (8:1)
  • Bring your senior staff to America. Plan on this process taking a long time to arrange if someone needs a passport because they will probably have to make three trips to their home state to get it.  Over a several month period.
• Culture
  • Lean the culture
  • Learn what areas your people are from
  • Native costume day is a great icebreaker for when you're in town
  • Learn how to ask questions like an Indian not an American
  • Yes doesn't mean yes and no doesn't mean never
  • Learn how to eat the food ... with the right hand
  • Before you eat meat in front of a vegetarian, ask
• Relationships are critical
  • They will want to know a lot about your family and life
  • You should ask them about families and life
• Personal Stuff
  
  • Anticipate Delhi Belly, even in the ITC Sheraton in Bangalore
  • Don't fly Indian Airways, certainly not in coach, and even business stinks.  First is meh.
  • Get a driver who speaks English well and always get the same guy.  Tip effectively, your life is in his hands.
• At Home
  
  • Your home office technical staff needs to be more senior and better communicators because their job will be harder.  On the other hand, since they will be doing technical leadership and the really interesting work you'll be able to hire better people.
  • Don't have all the meetings on US time - this is rude, swap it around

My Favorite Non American Place In The World

I really really like India as a country - a big messy sprawling vibrant alive democracy.  With great food and tasty cold beer and beautiful sights. And, yes, grinding poverty which is being pushed back as fast as humanly possible.  It's good to remember that in the 1940's about 1 in 5 draftees were unfit for service in the military because of poor childhood nutrition or gross physical infirmities. 

And my team in India and the Indian co-workers and friends I've had over the years have only strengthened my attraction to the county.

So if you have the money, the time, and the need, then extending the capability of your company by building a team in India could be a professional success and a personal reward.