Well, I am not a startup expert. Neither I can cite innumerable case studies on the failure of startups. But In past 7-8 years, I have worked with a number of startups of different sizes and organizations which were at a different level of business. Some fizzled out, and some are striving hard to stay relevant. From this experience, I am extracting my inferences.
First a few words on Startups. We are passing through the age of startup revolution. Generally, every progressive economy passes through this phase. In India, this phase is going to last longer than other competitive economies. The reason being first, the slow start of the phenomenon. The 'startup revolution' is taking place at a very slow pace and companies have not been able to sustain themselves beyond series C. Very few companies have reached to the IPO stage. So, it will require some more time for the startup flight to take off. The runway is proving little bit longer than expected. And many companies like Housing or Tinyowl are losing all their fuel on the runway itself.
Second, the breadth is relatively limited. Startup bug has spawned hardly in 2 or 3 sectors. Mainly it is seen in Online Taxi, Online marketplace or real state or food delivery. Others are yet to become household names. Given the size of Indian middle class and Indian economic space, it offers huge space and possess huge scope for future business activities.
Third, It is limited to services based IT-enabled business models. We are yet to foray in the manufacturing or non-IT startups. We have businesses in online wash, online plumber, online taxi etc but we are yet to see a food processing chain industry rising from dust and making it big or an agricultural startup plugging the backward-forward linkages in the economy.
Fourth, We are largely revolving around services based model and product based startup market is still untapped. Primarily this is attributed to our investor class inclination to see quick revenue model in any business. The Baniya class wants quick and assured returns so they press for services based business model. Products take some time to build and achieve product-market fit. Thus, revenue generation in product startup begin at a later date but once it starts flowing, it'll fill your coffers sooner than you expect or imagine.
There are other reasons but a discussion on them requires a separate article. Anyway, Startup culture is something not new. We have been doing businesses across roman and Persian empire since the beginning of time. However, this time, it is a difference of scale, speed, and space. The time it took for Flipkart to reach 1000 crore club was less than five years. Similarly, earlier businesses were small or mid-sized businesses but the one spawned in the current age and who have become the face of startup revolution in India are reaching scale. For example, a number of transaction on Billion day sale or number of taxis booked on Ola are really high. And powered by IT, they are going national or global in no time. Earlier it used to take a decade or two to open new branches in different cities and states but current age startups are directly reaching to their customer with the help of Information Technology.
However, interestingly one thing remains constant. Earlier trade models were dominated by Baniya and specifically Marwaris and even the current age young entrepreneurs also predominantly belongs to the same community.
Every successful startup has its own success story. However, there are denominators which are common to all of them. To list a few, a balanced, closely bonded, core team, prehistory among core members, power of the platform, business skills like selling and marketing, the problem statement and innovation quotient of the solution, good tech team and leadership. Largely one can factor it in two heads the Team and the Idea. And if I have to choose one then it would be Team because if the team is motivated and competent enough, they can always find one or two unsolved or half-solved problems in our surrounding.
In the recent times, we are seeing a number of startups failing. Some fizzle out before even beginning but other go off-track before taking off for example food tech startups. Thankfully for India, no mid-air crashes have happened except the case of housing. Thus, we have some pertinent questions on why do startups fail and is this startup thing going to work in India?
The ones which are not even able to start are primarily startups with unbalanced or fragile teams. For example, nowadays a number of management graduates think about opening a startup but they are not able to find the complimentary skillset of technology in the market. Thus, organizations become top-heavy most of the time. The other team problems like lack of clear division of responsibility, everyone's desire to become a photo face of the organization, ego-clashes, and lack of trust among core team members leads to tyre-burst before even beginning the journey.
Secondly, the Idea. Generally, if first is in place then you can make a solid beginning. But how fast the team pace up on the runway is decided by the nature of the problem which the team is trying to solve. In general parlance, some problems are vitamins (luxury items for the common man) and others are painkillers (must solve). So the team must know what is it trying to solve? If it is painkiller then trying out different solutions is more important instead of delivering a quality solution. Thus a good interactive GUI or classic user flow are features which come in the phase of expansion rather at the launching of the product. However, if the problem is luxury then the quality of experience matters from day 0. Further, sellability of the idea also matters. But these are fringe factors. Given the size and diversity of India, one can always find appropriate product market fit.
The Third factor relates to the last point. That is the speed of startup. A slow startup will always be beaten in the race because that somewhere down the line it becomes the culture of the organization. So if team members are not thinking about the idea while eating drinking relieving then it does raise my doubts about its success. The speed enables you to try out different models in short time. It runs on the "try fast, fail fast" model. This helps in finding the quick product-market fit thus giving the company a first-mover advantage if the problem is new. Remember the law of nature, there are always seven teams simultaneously working on similar kind of problems from some underground garages.
If the first three variables fall in place then the fourth one is automatically taken care. It is about investment. Finding an investor is akin to finding a right university in the USA. Every aspiring MS or MBA candidate gets an admit from the US universities provided he knows his profile and applies according to his Aukaat. One has to mould the company profile, his own profile, team profile and product profile in order to put the hat on investors head. Investors money acts as a fuel which allows the company's plane to take off in the start-up world. However a point of caution, an investor should only provide fuel. He should not provide pilots. The responsibility and rights of piloting the place lies with the core team only. And always take good fuel i.e. always accept good money. Don't allow investor to take your plane or occupy too many seats in the plane in return of some ounce of fuel. These investors are new age Bollywood avatar of Lala, the famous money lender character of our 70's or 80's movies.
Now comes the two most important things for the in-flight journey. First is expansion plan. An indiscriminate hiring during expansion phase will sound the death-knell of the startup. So one should ensure that next line of leaders shares the same vision and energy as the core team. But evidently, the core team has monetary motivation for being energetic. What about new hires. Thus, organizations should be forthcoming in sharing their stakes with team members. More importantly, core team members should watch out for attitudinal disorientation among next line of employees and should immediately fire people with negative thoughts. As one says, one rotten apple spoils the whole barrel. One negative influence can bring down the motivation of the whole team.
However, most of the things which I have written here are common day knowledge and possibly most of us are aware of these things. It is a matter of how you do it. Simply knowing what to do is not sufficient. In this regard, I must apologize because there is no one rule-book, there is no magic wand and there are no defined strategies. If there is one thing which captures the "how-to" then it is organizational leadership. Of the 100 employees, 90 will look up to leadership in awe for inspiration and motivation. 95 will seek direction and vision from the core team. And 99 looks up to them for the salary and selfish gains. The leadership quality lies in understanding these human whims and fancies and executing the plans accordingly.
A leader should guard the organization culture in a zealot manner. It needs to be positive, open and purposive. As Kunal Bahl says, everyone is looking for a purpose in life. If a startup is able to show its employees the path and the core team can run on it from the front then startup will continue to fly. Else either it'll crash in air or will make a hard landing.
First a few words on Startups. We are passing through the age of startup revolution. Generally, every progressive economy passes through this phase. In India, this phase is going to last longer than other competitive economies. The reason being first, the slow start of the phenomenon. The 'startup revolution' is taking place at a very slow pace and companies have not been able to sustain themselves beyond series C. Very few companies have reached to the IPO stage. So, it will require some more time for the startup flight to take off. The runway is proving little bit longer than expected. And many companies like Housing or Tinyowl are losing all their fuel on the runway itself.
Second, the breadth is relatively limited. Startup bug has spawned hardly in 2 or 3 sectors. Mainly it is seen in Online Taxi, Online marketplace or real state or food delivery. Others are yet to become household names. Given the size of Indian middle class and Indian economic space, it offers huge space and possess huge scope for future business activities.
Third, It is limited to services based IT-enabled business models. We are yet to foray in the manufacturing or non-IT startups. We have businesses in online wash, online plumber, online taxi etc but we are yet to see a food processing chain industry rising from dust and making it big or an agricultural startup plugging the backward-forward linkages in the economy.
Fourth, We are largely revolving around services based model and product based startup market is still untapped. Primarily this is attributed to our investor class inclination to see quick revenue model in any business. The Baniya class wants quick and assured returns so they press for services based business model. Products take some time to build and achieve product-market fit. Thus, revenue generation in product startup begin at a later date but once it starts flowing, it'll fill your coffers sooner than you expect or imagine.
There are other reasons but a discussion on them requires a separate article. Anyway, Startup culture is something not new. We have been doing businesses across roman and Persian empire since the beginning of time. However, this time, it is a difference of scale, speed, and space. The time it took for Flipkart to reach 1000 crore club was less than five years. Similarly, earlier businesses were small or mid-sized businesses but the one spawned in the current age and who have become the face of startup revolution in India are reaching scale. For example, a number of transaction on Billion day sale or number of taxis booked on Ola are really high. And powered by IT, they are going national or global in no time. Earlier it used to take a decade or two to open new branches in different cities and states but current age startups are directly reaching to their customer with the help of Information Technology.
However, interestingly one thing remains constant. Earlier trade models were dominated by Baniya and specifically Marwaris and even the current age young entrepreneurs also predominantly belongs to the same community.
Every successful startup has its own success story. However, there are denominators which are common to all of them. To list a few, a balanced, closely bonded, core team, prehistory among core members, power of the platform, business skills like selling and marketing, the problem statement and innovation quotient of the solution, good tech team and leadership. Largely one can factor it in two heads the Team and the Idea. And if I have to choose one then it would be Team because if the team is motivated and competent enough, they can always find one or two unsolved or half-solved problems in our surrounding.
In the recent times, we are seeing a number of startups failing. Some fizzle out before even beginning but other go off-track before taking off for example food tech startups. Thankfully for India, no mid-air crashes have happened except the case of housing. Thus, we have some pertinent questions on why do startups fail and is this startup thing going to work in India?
The ones which are not even able to start are primarily startups with unbalanced or fragile teams. For example, nowadays a number of management graduates think about opening a startup but they are not able to find the complimentary skillset of technology in the market. Thus, organizations become top-heavy most of the time. The other team problems like lack of clear division of responsibility, everyone's desire to become a photo face of the organization, ego-clashes, and lack of trust among core team members leads to tyre-burst before even beginning the journey.
Secondly, the Idea. Generally, if first is in place then you can make a solid beginning. But how fast the team pace up on the runway is decided by the nature of the problem which the team is trying to solve. In general parlance, some problems are vitamins (luxury items for the common man) and others are painkillers (must solve). So the team must know what is it trying to solve? If it is painkiller then trying out different solutions is more important instead of delivering a quality solution. Thus a good interactive GUI or classic user flow are features which come in the phase of expansion rather at the launching of the product. However, if the problem is luxury then the quality of experience matters from day 0. Further, sellability of the idea also matters. But these are fringe factors. Given the size and diversity of India, one can always find appropriate product market fit.
The Third factor relates to the last point. That is the speed of startup. A slow startup will always be beaten in the race because that somewhere down the line it becomes the culture of the organization. So if team members are not thinking about the idea while eating drinking relieving then it does raise my doubts about its success. The speed enables you to try out different models in short time. It runs on the "try fast, fail fast" model. This helps in finding the quick product-market fit thus giving the company a first-mover advantage if the problem is new. Remember the law of nature, there are always seven teams simultaneously working on similar kind of problems from some underground garages.
If the first three variables fall in place then the fourth one is automatically taken care. It is about investment. Finding an investor is akin to finding a right university in the USA. Every aspiring MS or MBA candidate gets an admit from the US universities provided he knows his profile and applies according to his Aukaat. One has to mould the company profile, his own profile, team profile and product profile in order to put the hat on investors head. Investors money acts as a fuel which allows the company's plane to take off in the start-up world. However a point of caution, an investor should only provide fuel. He should not provide pilots. The responsibility and rights of piloting the place lies with the core team only. And always take good fuel i.e. always accept good money. Don't allow investor to take your plane or occupy too many seats in the plane in return of some ounce of fuel. These investors are new age Bollywood avatar of Lala, the famous money lender character of our 70's or 80's movies.
Now comes the two most important things for the in-flight journey. First is expansion plan. An indiscriminate hiring during expansion phase will sound the death-knell of the startup. So one should ensure that next line of leaders shares the same vision and energy as the core team. But evidently, the core team has monetary motivation for being energetic. What about new hires. Thus, organizations should be forthcoming in sharing their stakes with team members. More importantly, core team members should watch out for attitudinal disorientation among next line of employees and should immediately fire people with negative thoughts. As one says, one rotten apple spoils the whole barrel. One negative influence can bring down the motivation of the whole team.
However, most of the things which I have written here are common day knowledge and possibly most of us are aware of these things. It is a matter of how you do it. Simply knowing what to do is not sufficient. In this regard, I must apologize because there is no one rule-book, there is no magic wand and there are no defined strategies. If there is one thing which captures the "how-to" then it is organizational leadership. Of the 100 employees, 90 will look up to leadership in awe for inspiration and motivation. 95 will seek direction and vision from the core team. And 99 looks up to them for the salary and selfish gains. The leadership quality lies in understanding these human whims and fancies and executing the plans accordingly.
A leader should guard the organization culture in a zealot manner. It needs to be positive, open and purposive. As Kunal Bahl says, everyone is looking for a purpose in life. If a startup is able to show its employees the path and the core team can run on it from the front then startup will continue to fly. Else either it'll crash in air or will make a hard landing.
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