Go back to basics — What’s your Signal to Noise ratio?
I am an electrical engineer. But don’t worry. This is not an article about signal processing.
If there’s anything the past 18 months have taught the world, it’s that if you are safe, healthy, happy, have food to eat, and around loved ones, you have it all. Everything else is a bonus.
In the last four years where my team and I have been trying to build Praan, we struggled to raise any money for almost three years — except for an INR 10 lakh (~$13,500) forgivable loan from friends and family in 2019. We saved every penny and judiciously spent this over 1.5 years only on what truly mattered.
Throughout this time, I saw friends, acquaintances, and sometimes even start-ups in the same industry (even with terrible tech), raise tens of millions of dollars. It felt terrible since nobody was willing to fund us with $100K, let alone $10M. In order to make these transactions seem significant, most of these startups and their investors paid media companies to create noise around the deal. What’s sad is that some of those companies don’t exist today.
The goal of startups is not to raise money. It is to change something so significant in the world that many people or businesses want to pay you for that product or service. I believe that allowing more than 3 Billion People in the world to breathe cleaner air and reducing particulates and CO2 from ambient air, is one of those things that people will eventually care about and pay for, if done right.
The noise that we see on social media around fundraising, makes people forget what truly matters. Fundraising and the amount raised becomes the center of attention, and the product or long-term profitability/impact get left behind. Valuation becomes important, not dilution. People want to be called millionaires on paper when their true bank balance may show otherwise.
When you look at others, you can either feel miserable or great about yourself. I felt bad once or twice, but what I was unknowingly doing as a response to being sad, was placing all my bets on my team and myself — Not on investors who were funding us. We didn’t have fancy million dollar news articles, but we had the best team from 70+ cities around the world. We didn’t have large grants, but had small grants from very important people. We couldn’t pay hundreds of thousands of dollars for software, but got more than a million dollars in software backing from large companies like Autodesk and ANSYS.
Don’t get me wrong. I too have tried to maintain a constant LinkedIn and Instagram presence and post updates about Praan to create opportunities and find talent. But those are not on our priority list, they are signals to people who care, that things are moving forward and that they must join our mission. Not noise to get attention to us.
Every time there has been “noise” around what we are doing, it has attracted the wrong kind of people — the wrong investors who invest money on FOMO and looking at others, the wrong team members who just want to use us as a resume booster and quit, the wrong people who want to extort money or IP out of us using frivolous legal threats, or those who want to buy us out because others are talking about us. In May 2018, someone literally offered me INR 1 Crore ($135K) to buy Praan entirely and have me work for them — we only had one prototype, and our team was 1 person — me. I was in my sophomore year of college then.
The noise also makes some of the other people who were fair till this point, become impatient and harass you into listening to them because they fear they may miss out — I’ve gotten direct calls from San Francisco at 3am IST because the individual was scared I’d not work with them. Recently someone even threatened litigation if I did not accept their money, because I had previously agreed to on Whatsapp and Email. The funny part is, I had all intentions to accept this person’s money. But the litigation threats and desperation, showed me that this is not the person I’d ever want to work with — since they’re focused on the noise and not the signal.
In contrast, every time we’ve made true progress on technology, business, or partnerships, it has drawn the best people to us who have trusted us with their time and money, no questions asked. I wish I could name some of these people here to show the true extent, but since many of these people are not officially directors, mentors, or investors, I cannot use their name as it may be misunderstood as PR. However, one person I can feel comfortable mentioning is one of my mentors — Dr. Maulik Majmudar whom I know since 2015. As soon as he read my previous medium article, he was kind enough to email me and offer to invest in my round, in his personal capacity, whether or not others did. I also know, that this person knows and trusts me enough that even if I get a $10M offer tomorrow, I would first accept his money. This is where true signal and relationships matter. There was no FOMO here. There was trust and faith.
Throughout this pandemic (in 2020), we’ve been passed on by more than 40 VC funds and tens of angel investors. At one point, a group of angels pooled together few hundred thousand dollars, but at a significant dilution (which we eventually couldn’t close). Today, we’ve seen multiple VC firm term sheets, but not always from people who understand us, and so we’ve said no. Imagine not getting offers for a year and then saying no to the few offers you get. It’s not arrogance, it’s seeking your own sanity.
In fact recently when I was in New Delhi for work, two VC’s showed up at my hotel early in the morning on a Saturday, to try and meet me in person and close out the deal before others did. The reality is, some of them didn’t even fully know what we did, couldn’t manage the risk profile, or understand our tech. So even with the FOMO, they were not the right partners for us. That’s what noise brings you.
Today, when the world is struggling, and in India we are seeing hundreds of thousands of people die, it is not the companies with the most noise on the internet, saving lives. It’s those with true resources, technologies, and service, who are able to add value. No bank balance is helping you fight health problems. It may buy you a hospital bed, a ventilator, or oxygen support. It will buy you time. Not always get you through the disease.
Raise less money if you get the right people. Take the lower valuation if you get the right people. Don’t hire someone if you know they will do minimal good. Delay your funding or project if it’s not the right people for you — it’s almost like a marriage. Do you marry the first person you see just because of time constraints? Probably not. Life is an adjustment, but not that much. I understand that this is not black and white and that sometimes we are forced to accept some situations, but this is for the other 99% of times where you have an option.
Focus on the health, happiness, and sanity of yourself and the people who work for you. Focus on the logical next steps which will get you closer to your goals, not on the next steps which will bring you the most attention or funding. Focus on the vision — for us, it was clean air for 3 Billion people, not clean air for the top 1%. You’ll be happier, find the right networks, the right team, the right investors, and hopefully a signal with the highest amplitude. Keep your signal to noise ratio as high as possible, good things will happen. Let your signal be more powerful than everyone else’s noise.