Startup India: Taking Stock

Last month, Mint did a feature on Hits and Misses in the Indian Startup universe. It was a great opportunity to take stock of reality, since most of what we read about in the mainstream media is a function of “survivorship bias”. Here are some interesting statistics from that story…

  • The E-commerce sector alone has raised over $11 billion over the past decade – roughly 75% of the funds that have been raised by Indian start-ups during that period
  • Of the $11 billion, Flipkart Internet Pvt. Ltd has raised more than $4.5 billion, and is now India’s most valuable Internet company at $11.6 billion
  • The top five most-funded start-ups in E-commerce to have shut down had raised $51.1 million in total, which doesn’t include the distress sales of companies such as Letsbuy and SherSingh
  • $3.1 billion (including debt) was raised by Digital Payment startups, making Paytm – now valued at $7 billion – India’s second-most valuable Internet company
  • Of the 192 companies founded in the Cab Hailing category since 2007, 76 have shut shop; Ola is currently valued at $3.5 billion
  • Nearly 310 start-ups in Healthcare, of 2,678 founded since 2007, have shut shop; Practo, 1MG, Portea are the top startups in this segment
  • As many as 2,460 ventures in the Edu-tech / Education space incorporated since 2007; about 224 have shut down
  • Of the 2,420 start-ups founded in Hyperlocal (home services+food tech+delivery) since 2007, 780 have shut shop
  • As many as 514 ventures tried group buying model one way or the other, but at least 221 shut shop

Think about those statistics for a moment; There are plenty of lessons to learn from. Here are some of my personal takeaways…

  1. A healthy dose of funding was available to those who ventured out and attempted to create an organization of value
  2. The best known in each segment typically finds it a bit easier to gain preferred access to investors, markets and customers, simply by virtue of their size and brand salience
  3. Path-breaking, innovative ideas executed well are not the only recipe for success; Addressing a customer gap with great execution at a profitable price point can work wonders too!
  4. Despite significant resources at their disposal, and addressing a real customer need, countless startups did not survive the past decade

For some of you dreaming of launching a startup, posts like these may signify doom and gloom. For others, it will probably provide the inspiration to soldier through.

The fact is, not every venture is meant to succeed and not every startup will fail. “There is nothing in a caterpillar that tells you it’s going to be a butterfly“, said R. Buckminster Fuller. For me, the biggest lesson buried in these statistics is that building a successful organization takes decades, not years. There is simply no shortcut to it.

Just The Beginning

ThinkShop completed 3 eventful years, last month. In that time, we have been fortunate to work with a number of clients on a variety of interesting projects, through solutions that spanned Technology, Business and Marketing.

We helped design the User Experience of a multi-device Trading Platform, and developed a Career Portal for a Life Insurance major that integrates with their Recruitment Engine and call-centres. We performed a Need Gap analysis for a Sales Mobility tool in Health Insurance, and helped define the Project Scope for an Online Securities platform. We conducted a Boot Camp on Understanding Social Media for the senior executives of a leading pharmaceutical firm, and helped develop Marketing Strategy for a startup in Education services.

If there was a common theme running through them, it was that every solution was focused on improving Customer Engagement, with Technology serving the role of an enabler.

These past three years, we have also seen many of you face some common challenges while trying to make sense of an ever-changing world. The Think! blog was meant, in part, to help you gain relevant insights into the Digital world, understand key trends, and figure out viable ways to meet your business needs.

Yes, Mobile has gained significant ground, and Machine Learning is all the rage, but RoI on Digital initiatives continues to elude many, while Business tries to figure out what is the best way to engage in a multi-screen, multi-format, always-on world.

So, what can you do? How can you make sense of an ever changing dynamic and engage with customers despite their ever-decreasing attention span?

If you are new to the Online world, and are looking for the essentials involved in creating a digital footprint for your product or service, the Digital RoadMap offers a quick guide to get you off the ground. In it, you will learn about what constitutes success in the Digital arena, how you can be more customer-centric, and how much is too much. While you’re at it, if you would also like to improve your chances of success when working with external vendors and service providers, here are some good insights on How To Be A Great Client!

All the Technology in world can only help you do a few key things well: Amplify the reach of your message, reduce the Response times involved, improve the Relevance of a product/service fitment or achieve exponential Scale. What’s important to keep in mind is that business is, and has always been, about defining a target Customer, understanding their specific need, and meeting it in a profitable way. If you are able to provide exceptional value to your customer, at a sustainable cost, you will succeed in your objectives. No two ways about it.

As you go about your own journey of leveraging the Power of Digital  to engage with your Customer, don’t be afraid to seek help from those who have walked the path before you. If there is anything we can do to help, it will be our pleasure…

Startup DNA

What does the DNA of a startup look like? While almost every startup believes that it is building something entirely unique, there are some defining characteristics that dramatically increase the probability of startup success.

Shane Snow – the Chief Creative Officer of Contently – lists some excellent points in his post. Here are a few of my favorites…

  • Rather Than Planning, Doing
  • Looking For 80/20s
  • Split Testing And Iterating

Bias for Action has got to feature among the top of any list you see on this subject, since a startup is essentially about getting started with the idea, and not just making elaborate plans on paper (or on a spreadsheet!).

If you are planning to launch a startup soon, be wary of collaborations with key stakeholders (partners, vendors or even senior staff) that do not exhibit this trait. You will regret it if you don’t, and waste precious time in the bargain.

Pareto’s Principle of 80/20 will definitely apply to your ToDo list, once you start your journey on the road to entrepreneurship.

Yes, the list of things to do will be long, and every item on it will seem important. But, every entrepreneur has limited resources and limited time at his/her disposal. And, in the end, what will matter is that you did the things that mattered most – and ignored the ones that didn’t.

Finally, Testing and Iteration will get you further than most, and also ensure that you get bang for the buck.

Should you advertise on Facebook or Google? Should you use subject line A or B in your introductory email? Should you go with logo option 1 or 2? Very often, we don’t know what will work in a particular context, but can ascertain our course of action based on data, as long as we are willing to learn from the experiment, and iterate as needed.

If budget is a constraint – as it often is – you need to run carefully though-through experiments to see what works better. Discard what doesn’t, and scale up what works by putting more resources behind it. If budgets are generous, run even more experiments!

May the force be with you.

Startup Perils

Yes, India’s startup scene is currently witnessing what can only be called “rush hour”. Yes, everyone and his cousin seems to have a startup idea, and is on his way to get funded. Yes, the co founders of Flipkart and Snapdeal have become the poster boys of the new economy. Yes, Uber’s valuation of $50 Bn puts it ahead of General Motors’ market cap by $4 Bn, today!

But, there is a dark side of startups that we don’t seem to want to talk about…

Rahul Yadav – CEO of Housing.com – was sacked by the Board, and more than 160 employees were let go recently. Ola and ZopNow have faced “hacks” by users being able to recharge their wallets without paying real money. Foodpanda recently features in the news for accepting orders from restaurants that have long been shut down, and other operational woes.

The story is not limited to these well-known names. This is an issue that affects many, many startups. The fact is that a few boys (or men) writing code, does not a business make. Building an organization requires a tremendous amount of skill sets, and not every one is suited for the task, regardless of how noble their intent is.

This is not a post meant to discourage folks from quitting their jobs and forming a startup, nor is it meant to feed the paranoia of those of us who ‘never use their credit cards online’, or dissuade young aspirants from seeking employment in other startups. It’s all of that, and more.

We play a variety of roles in this ecosystem. We are customers, employees, partners, co-founders and vendors to this brave, new world of startups. The old adage – caveat emptor – applies in its true spirit.

There will always be those among us who wish to ‘game the system’, or hack their way into disproportionate gains, or (as founders) just be ill-equipped to predict what lies ahead and end-up not delivering on objectives as intended. The way things used to work is no longer the way they do. And, the fact is that there just aren’t enough checks and balances built into the ecosystem to prevent such fiascos in the future.

As Peter Parker once said in Spiderman, “With great power, comes great responsibility.

The Internet is a democratic force to reckon with. But, the responsibility lies with us to watch out for the perils on the path ahead, and take appropriate measures. Whatever role we play in this – employee, vendor, customer – it is up to us to figure out what the risks are, and safeguard against them.

The Uber model allows a driver to earn up to Rs. 100,000 a month in earnings, but it helps if he understood that he has no control over the ‘Rate per Kilometer’ charged to clients, and that the demand for rides may not always last. The young man with his motorcycle, eager to join an e-commerce giant as a delivery boy, can surely dream of a brighter future, but it helps to know that the company can run out of funding if it does not operate with prudence. The customer can be overjoyed on finding his favorite local eatery on an ordering app, but also face disappointment two hours later when he finds out that his order was not sent through at all!

No, the answer does not lie in locking up your credit card, disconnecting the Internet, or refusing to participate in any manner. We will, however, need to improve our understanding of the “new world order”, if we want to use these ‘developments’ to our advantage.

We are living in exciting times – there is no doubt about it. Just keep an eye out for the dangers, while you’re out cruising on the information superhighway…

Startup Success Myths

Rahul Varshenya makes a cogent argument in the Huffington Post on Why You Shouldn’t Emulate Silicon Valley for Startup Success:

Don’t make the mistake of imbibing what you hear coming from the mouths of the Silicon Valley behemoths for there are many, many more who have proven otherwise.

 

Here are some of those ideologies to be wary of:

 

#1 – The success of your startup depends on having a co-founder

#2 – Build an MVP. Always build an MVP

#3 – A services business is a shameful one to start. Build a product.

#4 – Outsourcing product development is a bad thing.

The write-up offers interesting insights and data points for any startup to consider. If you were planning to just wing-it, it would sure help to learn about how the world works, and about the various lessons in success and failure. But, we agree with Varshneya when he writes, “You don’t need any Silicon Valley pundit directing you what or how you should build or run your business.”

Here’s our addition to the list of ideologies to be wary of:

#5 – Growth is more important than Revenue

#6 – You need substantial capital (read: funding) to scale your venture

#7 – A well-defined Business Plan is the key to startup success

#8 – Scaling up exponentially is the only viable business strategy

None of these points ought to be dismissed outright or accepted as gospel truths.

The fact is that every entrepreneur is on his own journey, and if he succeeds, will impact the world in his own unique way. We believe there is ample room for “the misfits and the rebels” to show the world what they can do, when they combine purpose with determination and drive. Don’t you think?