Fight or Flight? – Wrong Decisions that led to wreckage
“O human race, born to fly upward, wherefore at a little wind dost thou so fall?” – Dante Alighieri, The Divine Comedy
Worldly fame, that’s what we all chase. Who doesn’t want to be the poster boy of Fortune 500 and Forbes? The beginnings are always humble, but this is a gamble. Fame can get into the heads quite early, and the end results can be disastrous.
Suppose, two guys, with their ideas on the table, are expecting a reply from engineers and when the nod of approval comes, they can’t help but cherish this moment. Their craft’s been built, and the two will helm the cockpit. The flight path is set and the wings are ready. A few licks of this Worldly Fame can be felt on their happiness-stricken faces. It is time to take-off.
But with altitude comes turbulence, and an even greater threat of being lost in a storm, or to be thwarted by those hell-bent on taking control of the aircraft. And those cockpit controls are definitely not inviting.
This is the story of almost every single startup that took off with a fresh pair of wings from the Indian Startup launch-pads. Over 200 startups shut their hangars in 2016. Sometimes, a few can pull the strings of their parachutes, but most land hard back on earth.
Let’s make it clear, flying a startup is no child’s play. But then, why does everyone treat it as such? If I were to suckle on a pacifier and earn millions, then, well, I wouldn’t be writing at all.
With a million switches, dials and levers, what do these pilots do?
Fuel my Ride!
The first stop is getting some fuel to kick-start your plane. Now, you can either use home-grown fuels, bootstrapping to success, or borrow from investors, who will want their share of your aircraft. Breathing down on you, their aim is profits, and they fueled you because you had an earth-shaking idea, or because someone else took off in a similar plane, like yours.
If I were to give someone a hefty sum from my coffers, I’d expect them to use it wisely, and I might even try to alter the course to see those investments grow by a big multiplier. Same goes with the Venture Capitalists. Once they provide you with initial funding, they try to make their presence known in every major decision that the startups make. Now, this can come as a boon, but it can also rain down as a curse, and you will be confused often.
When the founders and investors don’t see straight, things become chaotic, and we witness a storm of biblical proportions. With little agreements and/or a diluted equity, you get blunders like that of Housing.com. Either the investors back out, or the founders are laid off, or the company is eaten by big fish.
Jumping the Bandwagon
Copying a successful IP is prominent in the industry, and founders, as well as investors, fall victims to this, like Ola, FoodPanda, etc. Since everyone wants a slice of a successful setup, a tough fight ensues from the local businesses and the rivals. But when implementation fails, the shops close.
An innovative idea is nothing but an idea. Implementation and business model are the key factors to achieve an altitude, otherwise, a poor sinking model can even put Titanic to shame. If the model is planned out just to attract customers, while giving no heed to proper shaping of the company, failing is inevitable. For example, high discounts, offered by companies like PepperTap, resulted in no gain from the market.
Because Money grows on Trees
Splurging the money willy-nilly results in a deep plummet of funds, and then it is the workers that suffer the most. When you don’t put a stopper on your bottle, the water is likely to either get spilt or evaporated. As seen in the case of AskMe, where 4,000 employees were laid off because the pilots wanted their passengers to have a luxurious flight at the cost of an economic ticket. Flipkart, SnapDeal, TinyOwl, PepperFry, Urban Ladder, etc. have incurred losses that are twice or thrice their revenue. There are some, either funded or bootstrapped, who have saved well and are making a sturdy progress, like FreshWorks, Wooden Street, Wingify, etcetera.
With great funds come great salaries. You already spent a good amount in marketing, so why not spoil yourselves? A giant safe filled with gold especially for you, Uncle Scrooge?
As seen in the case of Flipkart, where, in the FY16, it paid ridiculous amounts of salaries to its top tiered executives, whereas Amazon paid market-benchmarked salaries.
A Different League
There are, however, fleets of startups, who have proven themselves against these odds. By keeping their funds safe, with strategic advertising, word-of-mouth, and having an excellent business model, the following companies, amongst other successful ones, have sailed high with profits:
BookMyShow: Bringing relief from long queues for events and movies, BookMyShow has made a huge impact in India. With no queues, no physical tickets, and an impressive fleet of 2,500 screens of all major multiplexes, BookMyShow moved in first and provides ticketing solutions to various cinema partners across the country. As they say, early bird catches the worm.
Wooden Street: India’s first online custom-furniture portal, Wooden Street rose to success by bootstrapping and keeping a low marketing budget. In the competitive market of well-funded online furniture retailers, Wooden Street caught on a niche segment of providing custom furniture to its customers, rather than having an inventory-based model, and being profitable within two years.
Zomato: A restaurant search and discovery platform, Zomato rose to prominence by providing its millions of users the same order-from-home convenience, while also taking their reviews into consideration, which change the lists of restaurants as per ratings. With an early mover advantage, and a presence across the globe, Zomato stands out in a different league from its competitors.
Byju’s: Revolutionizing education in India, their learning app provides an easy to use interface coupled with strategic and easy-to-understand watch-and-learn videos to teach students across India. With the team, including Byju, themselves taking on the responsibilities of teaching, and creating their own content, even sounds and music, their ways of visual teaching make them the top contender in the Indian EdTech scene..
Zoho: Founded in 1996, this bootstrapped company has emerged as a multi-billion dollar player, providing a robust Customer Relationship Management system, along with several other home grown products and packages to help businesses around the world. Their excellent products, plenty of powerful tools and modules, along with affordable rates, are in use by big names across the globe.
Quoting the great Dante Alighieri once again, “A mighty flame follows a tiny spark.”
So keep that spark running efficiently, and soon, you will have a mighty flame. Otherwise, a small gust of wind is all it takes to bring you down.