[MUSIC] So tell us the Zoho story if you would. You said they got to where they are today with no external financing. Many of our participants here are in very early stages of their companies. They've got an idea maybe, or they've built something in the lab, and they want to get it going and they think they need capital. But how did Zoho in its very, very earliest days get over that hump? >> Well, Zoho and many others have essentially gone for customers as aggressively and as early as possible. In Zoho's case actually it's a slightly interesting a twist on the story. They had a different product than the product that has built them into this $300 million company. They had a product that was I think it was called Manage Engine. It was a small product in an IT analytics kind of space. Selling it to IT organizations, network management organizations. And that product got them to a significant amount of revenue, several million dollars worth of revenue. But this product didn't have the steam in it to become a billion dollar company or even a few hundred million dollar company. So using that cash cow business, Sridhar basically started the Zoho product which is a suite of productivity tools in a SaaS cloud mode, including CRM campaign management, and everything. And that really took off and repositioned it to sell online to small business, and that really took off. There was a gap in the market basically did the Salesforce.com business model and value proposition, cut the price by one-tenth essentially, and offered it to people with online marketing. That's the secret of Zoho. There are two things that I've learned in this process that are very helpful tips, and we have Entrepreneur Journeys series books on both of these topics, bootstrapping using a paycheck and bootstrapping using services. Both are very powerful tried and true methods of bootstrapping companies when you are in that early cash-strapped phase. Keep your job if you have a job, and you can do this on the side. Get your company launched on the side, get your company validated on the side. That's a great way to get companies off the ground. Quit after you've got some traction going, you see that this thing has legs and it's not going to flame out. In One Million by One Million, again, we have lots of case studies of companies bootstrapping with a paycheck. We encourage them. No accelerator in the world encourages this method, by the way. >> Exactly, yeah, right [LAUGH]. >> [LAUGH] But we do and because we believe that it works. There's no reason to not encourage something that works. And then bootstrapping using services is another one, where you essentially take service contracts in an area in which you're going to want to build your product eventually. So what that gives you is immense amount of customer intimacy. You'll learn what their problems are, you build something that they want you to build for them. But you negotiate intellectual property rights, and then you turn that into a product in due course, but it's cash-financed by your customers. This is another way a lot of companies. Oracle was built this way, did you know that? >> Yeah, I did know that, yeah, yeah. In fact, some of the biggest companies around. Michael Dell, when he built Dell, there was a 19-year-old freshman in a University of Texas dorm room wanting to sell PCs to small businesses, and he asked them for the check before he built the PC. Well, if a 19-year-old freshman can do that, can't most of the people listening to you and me? >> Right, that's the point. >> Okay, so question. What about these so-called winner-take-all markets that we're hearing so much about, where the winners seem to be those who have the big huge war chests? Does raising earlier capital make more sense there or do you think these principles still apply? >> So let's take the examples, right, Facebook. >> Yep. >> When Facebook raised money, what is Facebook's first round of financing. It's Peter Thiel investing half a million dollars for 10% of the company. At this point, Facebook has already taken off. It was started in Mark [LAUGH] Zuckerberg's dorm room. The company had already taken off, huge numbers of users. If they wanted to monetize those users and start advertising to them, they could have. At that point, the fact that this Facebook phenomenon was already taking off was quite evident. So as a result, infusing venture capital into that already flying rocket makes sense. >> Makes great sense, right, because it's already proven. >> Those kinds of businesses, winner-takes-all markets typically, it's okay to take venture capital. >> And if you're building one of those where you hope to be the winner who takes all, so you're the early guys at Airbnb, or you're the early guys at Facebook, or whatever. How do you know when it's right to say, okay, now's the time to take capital? because Mark started it without capital. He only took capital lately. How do you know when to do that? >> Actually, you don't need to know when to do that. If you can see hypergrowth in terms of traction, that is the only situation where investors will be interested in funding something like that. >> So your data will tell you. >> Your data will tell you and investors will only engage if you can show hypergrowth, evidence of hypergrowth. If you cannot show evidence of hypergrowth, you do not have a choice. No one's going to give you money, period. >> Yep, so what do you think the benefits are? Why is it a better thing for an entrepreneur to bootstrap, keep costs down, get money from customers, and do it that way? Why is that better for the entrepreneur? >> [INAUDIBLE] it's better is that, don't forget investors are playing a portfolio game. So in a portfolio of a venture fund of let's say, 30-40 companies, if one company hits and becomes a unicorn, the portfolio's returns are made. That's the game they're playing. They're trying to find one runaway hit, one home run, and that's what makes the fund. You as an entrepreneur are not playing a portfolio game. You're [CROSSTALK] one company. >> You're like a portfolio of one, yeah, exactly. >> You have a portfolio of one. And it's taking up years of your life. There's a huge opportunity cost on your career. And it's immense amount of emotional energy, immense amount of commitment, immense amount of dreams, everything. All this you cannot really bet on a low-probability outcome. You should not. You are betting, many of you are betting this on very low-probability outcomes. You're being incredibly stupid, because successful entrepreneurship is not about taking stupid risks. It's about mitigating our risks and taking calculated risks. And if you go for stuff that you know are decidedly low probability, then your chances of success will be very low. This is why we have such immense infant entrepreneur mortality rates in the industry. In America 600,000 companies go out of business every year, 600,000. >> Scary number, isn't it? Yeah, yeah. So Sramana, many of the people with whom you're involved with on One Million by One Million aren't sitting in Silicon Valley. They're sitting in India or Africa or Latin America. >> All over the place. >> All over the world. How are things different there as these ideas apply? [MUSIC]