Manage episode 274385568 series 2406056
Avelo Roy is a serial tech entrepreneur, investor, and TV host, who started his first startup at the age of 19 around his patent-pending technology while still studying as a computer engineer at Illinois Institute of Technology. He built that company up to a multi-million dollar valuation by the age of 22.
Over the years, he has built eight businesses in the US and India with millions of dollars’ worth of products and services ranging from consumer electronics, artificial intelligence systems, healthcare process automation, food science, wireless communications, wearable technology, and graphical password applications.
As the great-great-grandson of the first female governor of India, a Gandhi-protégé (Sarojini Naidu), Avelo continues the legacy forward by tirelessly serving the Indian youth through entrepreneurship education using lean startup methodology and principles of Bhagavad Gita. His efforts through Kolkata Ventures in the past three years have resulted in 400+ revenue-generating startups responsible for around 4,500 new jobs created in 10 states of East India.
“Your investors should not have the right to tell you what to do, but they can advise.”
Worst investment ever
Avelo came across this fantastic well-respected venture capitalist who kept asking him to join a company that he wanted to buy from the current co-founders. The venture capitalist nagged Avelo for six months, but he kept saying no to his request. At the time, Avelo was running his business in Kolkata while the venture capitalist was in Delhi.
The venture capitalist was so interested in hiring Avelo that he flew down to Kolkata. He told Avelo in two hours, everything that he was doing wrong with Kolkata Ventures. The guy knew what he was talking about.
Getting a local mentor
Avelo grew quite interested in the venture capitalist, especially because he needed a mentor in India. At the end of their discussion, Avelo decided to take up his offer. So he flew down to Delhi. He looked at the team and the business to see what was possible.
The warning he should have heed
The founder of the company told Avelo not to take the deal. He said to him that he’d been unable to run the company. The venture capitalist told Avelo to ignore the founder. The reason why they were getting rid of him was that he was very arrogant.
He convinced Avelo to come on board and buy the founder out together. It took six months to get the papers in order and finally get access to the product.
Working with the best
The product the founder had built was the best in its category in the UK. But then the investors purposely let the founder “die”; they stopped investing. People came in with money and saw his arrogance, and would back off.
When Avelo got the product, it was just buggy, irrelevant, and had many problems. The biggest hurdle, though, was that the payment gateway was not working. There was no way for customers to pay for the product.
Trying to get things back on track
Once Avelo had the team ready, he proposed to rebuild the product to the investors. They refused and said that the product was known for its intelligence built with so many data sets, and had hundreds of thousands of users. He couldn’t get rid of it, create something in six months, and expect it to work. They insisted that Avelo work with the product as it was and make it work.
Avelo was getting quite frustrated with this decision. Having built eight businesses, gone through a product development life cycle over and over again, he knew that when you deal with somebody else’s code, it takes a long time to learn it. It is far easier and smarter to rebuild from scratch than take somebody else’s mess and try to make sense of it. But the investors disagreed with Avelo on that.
All gateways shut
The product was not making money as the payment gateway was still not working. To make matters worse, when the Cambridge Analytical scandal happened, Facebook shut the doors on small players. More than half of the product’s business was happening through its Facebook API, which got shut. Now he had a product that hardly worked. There was a lot of money going in, but no results were coming out.
Things just keep getting bad
As if all that was not enough, the venture capital firm that was supposed to put in the money ran out of funds, and they didn’t tell Avelo that. Now the whole project was on his shoulders, and for almost a year, Avelo had to fund it partially, putting in far more than he had wanted to do. His ego just wouldn’t let him allow the business to fail, but things kept getting more challenging as he still could not change the product. But he kept pushing it.
A ray of hope, perhaps?
After a while, Avelo managed to get back up to 100,000 users. They had gone down from 300,000 users to zero. From there, they went up to 100,000 users and kept going, but no transactions were happening. Money wasn’t going to come in without a working payment gateway.
Something interesting then happened. Out of the blue, two US magazines, Cosmopolitan, the number one magazine for women, and Seventeen, a top magazine for teenagers, ranked Avelo’s product as a top product for dating, something the company had never considered.
Hitting a wall yet again
After the review from the two magazines, Avelo realized that people were chatting with each other and finding friends through the product. He suggested to the investors to consider going in that direction. Again, the investors refused to listen to his suggestion claiming that they were conservative, tax-paying citizens, and such a product was unacceptable in India.
Counting his losses and letting go
A year into it and burning money every month, Avelo decided to add this investment to his list of bad investments, called it quits, packed his bags, and went back to Kolkata.
Avelo’s worst regret was not filing any paperwork for shareholding although they had agreed on shares and so he had no shares in the business. Avelo left with nothing even though he had invested his money into the business. His worst investment ever, though, was looking at this venture capitalist as a mentor.
Don’t let your investors force you into business decisions
Don’t let your investors corner you into making business decisions that you disagree with, especially if you’re an expert. Don’t let them twist your arm. Be strong, explain to them that you know what you’re doing, and if they want to make money, you need to do what you know best.
Get your paperwork done
Don’t get into any deal without the proper documents. Make sure that you have contracts and agreements in place before you commit to anything.
Don’t treat your employees like family
Employees need to be treated as employees to be effective work relationships and establish boundaries.
If you want to do business outside of your home country, you’ve got to be able to break your frame of reference and be adaptable to different cultures and customs.
Do your due diligence first, not after
It’s important to remember that due diligence is done before you act. Some people either never do due diligence, or they do it after. You have to dig in because when you go into a small business or a startup, you’re talking about investing the next one to five years of your life, and you are going to be completely focused on that. So you’ve got to try to uncover anything before you get into it.
It is lonely at the top
It is very lonely at the top because you can’t talk about the pains and struggles that you’re personally going through with your team. It’s just not appropriate. You can’t talk about the financial or business challenges that you’re facing. You have to keep a brave face.
It is normal for businesses to fail, so don’t be afraid to walk away. The reality is, the seeds of that pain and suffering are the ultimate seeds of your future success.
Be as diligent as you can be with the people you work with. Cover everything that could go wrong. Make sure that your investors don’t have the right to tell you what to do, but they can advise. Ensure that you have that level of autonomy as an entrepreneur before you get into a startup.
No. 1 goal for the next 12 months
Avelo’s number one goal for the next 12 months is just to survive 2020 and write. He is also looking at investing in a few startups that might be dealing with tomorrow’s technology.
“Think big, start small, grow slowly, then grow fast.”
Connect with Avelo Roy
- How to Start Building Your Wealth Investing in the Stock Market
- My Worst Investment Ever
- 9 Valuation Mistakes and How to Avoid Them
- Transform Your Business with Dr.Deming’s 14 Points
Andrew’s online programs
- Valuation Master Class
- How to Start Building Your Wealth Investing in the Stock Market
- Finance Made Ridiculously Simple
- Become a Great Presenter and Increase Your Influence
- Transform Your Business with Dr. Deming’s 14 Points
Connect with Andrew Stotz: