Smartix Case

Questions on Smartix:

1. Imagine you are Vivek Khuller. Should you accept the offer from MSG?

From our point of view, we would not accept MSG’s offer. Instead, we would make a counter offer. The main reason is that MSG didn’t like the deal and proposed a very different deal, which basically wants to control the company and hire all the founders as its employees. And as a founder, we would be very uncomfortable with MSG trying to strip most of the control away from us. In other words, we prefer control over wealth.

Moreover, MSG didn’t like the idea of VC, as MSG considered VC couldn’t bring any value other than money on the table. MSG only cared about minimizing the risks instead of thinking about the upside of the business. This shows discrepancy between our expectation and MSG’s. Clearly, MSG didn’t see as much potential in our system as we did. This gap in the views could be problematic if we were going to continue working closely together for next several years.

On the other hand, if Vivek came to realization that he cares about potential wealth and do not mind giving up total control of Smartix, then we think Vivek can take MSG’s offer. We believe it will strongly depend on which Vivek values more- control (staying as a king) or wealth (becoming rich).

1. Should Vivek have tried to start this venture without co-founders? Could he have been a solo founder?

No, Vivek should not have been a solo founder, Vivek needed to have co-founders. We believe in a proponent for finding a business partner. Since Vivek doesn’t have much technical background, so it is absolutely savvy for him to hire an expert from Bell Atlantic to build up the prototype of the system. Also, as the business expands, Vivek cannot expect to manage all the aspects of the company. Therefore, whether Vivek wants or not, co-founder search was bound to be done; it was only a matter of time, if Vivek really wanted to grow Smartix.

1. Discuss the team members Vivek chose. Were they good choices?

We think his team members’ backgrounds are excellent. The only concern we have is that we are not exactly sure what value Kirill is bring to the core management team. Whereas we consider Vevek as a strategy officer and main funding person of the start-up, Saurabh can bring ideas about the system design and business analysis from his background of both engineering and business consulting. Another thing that concerned was the fact that they never worked together as team before, because we think team chemistry and relationship is as important as competence of each individual. Although majority of the team members went to school together, it does not seem like they had any experience working with each other.