And so, 2023 is underway. Despite an economic slowdown, geopolitical crises, mass layoffs, looming inflation and recession, and a general sense of market malaise, optimism is thick in the air. At this point, people may have given up on the resolutions they so bravely declared they would adhere to at the start of the year, and slowly, find themselves going back to their former selves, because old habits may die hard. And if a minority of people are still sticking to their goals, the odds are: Throughout the year, one by one, they’ll abandon their new selves. It’s only the truly disciplined who make it to the end of December feeling new and improved, ready to take on the next year with new ambitions. But, why is it that it’s the majority of us who can’t keep going on that path? Do we lack discipline? Do we think we’re not worth it? Or do we find ourselves nostalgic about the old version of us that we’re not willing to maximise our potential? Why do we resort to letting history repeat itself and having all our years look the same?
As a startup founder, it’s great to visualise the success of your fledgling and accordingly make adjustments and pivots to fit market trends until you see some realistic metric of success. For many, after a mistake or a shortcoming, founders may want to move on as quickly as possible, pretend no one saw the mistake and look towards greener pastures. But these errors must be examined and one mustn’t let these mistakes go to waste. After all, these errors were the starting point for course correction. Some of the most interesting conversations I’ve ever had were with startup founders who had dealt with failure. And sure, their vulnerability made them quite endearing, but their mistakes become a bedrock for immutable and universal lessons on cardinal mistakes to be avoided, when venturing to build a startup. It’s like a post-game analysis after a sports event for startup founders to ask: “Where did we go wrong and what do we need to do to avoid something like this in the future?”.
Throughout my years, I have found that those who openly talk about failure have not only embraced it but fastidiously studied it to find out the error of their ways, kind of like conducting a post-mortem. And these people are not those who have 72 hours in a day, they’re people who have the same time any of us do, people who have felt frustrated, helpless and angry, but after the dust settles, instead of beating themselves up, they take the time for rumination, while also looking ahead. This time could be 10 minutes, 30 minutes or even a week, where they could brood — let’s call it the brooding break — take it out on a wall or scream in a confined room for five minutes and get over it. But, that blaming is done only for a limited period. After that, it’s time for actionable insights. There are always mistakes to look out for that fuel the engine of a vehicle on a failed journey for entrepreneurs.
Outsourcing your entrepreneurship is as good as you think it is. In a post-pandemic world, people may opt to take part in the gig economy and may want to moonlight: Have a core job plus have side entrepreneurial hustles. But, the truth is that no one can build it for you. The entrepreneurial grunt work would have to be done by the founder itself.
One case of this is Rocket Internet, a German company, which made billions of dollars by copying the models of successful Silicon Valley startups. At the outset, the premise seemed to be something of a get-rich-easily scheme: Fund companies which were similar to Silicon Valley fledglings, grow them at lightning speed in top Internet markets and after a substantial market share, sell them to the startups they were emulating. But it faced issues in India, where the sale of the company wasn’t lucrative or sold for a song or even worse, the imitation ventures shut down. The founders of those copied ventures were expected to be entrepreneurs, but Rocket Internet decentralised the hustle to the point where it had no control. And then, it exited nearly all its portfolio firms in India. This columnist has written about Rocket Internet here.
A successful venture needs a hands-on founder, not a hired gun with no vested interest. You have to be in the midst of it. There has to be a significant investment of time, dedication and effort on your part. In the mindset of “work smart, don’t work hard”, the core hustle of a venture can’t be delegated to someone else. As a founder, you need to be there to execute a robust business plan, have sound relationships with all the stakeholders and have a team around you which shares your vision and is willing to take it forward under your mentorship. The brunt of the startup falls on your shoulders, never forget that.
Timing is very very important. A founder may think that they’re late with their offering, especially if there are existing products and services out there. It also happens that sometimes, you’re too early with your offering because the market may not know it needs this product yet. Imagine if some of the products and services you needed amid the Covid-19 pandemic were pitched in 2005. They’d be laughed off the market and the dejected founder would have shut shop, only to be bewildered when new companies offering the same product or service would be minting money 15 years later.
A case of bad timing is IndiaPlaza, an e-commerce website that was founded in the 1990s around the same time that Amazon was launched. But, there’s a difference between the US and Indian markets, and in India, the market readiness was not there, the Internet had not penetrated India yet, mobile internet hadn’t grown traction yet and the online payments industry was still in its infancy. As a concept, IndiaPlaza had a novel idea, but it was ahead of its time, so it couldn’t capture the market. The founder thought his competition was offline retail stores. In the end, the first-mover advantage didn’t mean much, and in 2013, IndiaPlaza had to vacate its office, with landlords and vendors resorting to taking the laptops, computers, desktops, speakers, religious objects and more, because repayment was not possible. If the market isn’t ready, adoption rates will be low. When a product or a service is to be launched requires a combination of competency and luck. You’d have to gauge the market to see whether it is ready for your revolutionary product or service, have the skills to sustain demand and growth and if you’re launching a product or service in an established market, have a moat that would make people make the switch to your offering. And of course, a tiny bit of luck to help you out.
I’ve also spoken to various founders about how being ahead of their time could hurt business. Gupshup, a company that became a Unicorn in 2021, started as a free service more than 10 years ago that allowed people to send a message to all of their followers and telecom operators would be paid for sending the messages. This was in the early days of internet adoption. Building a big community was a challenge, because as they got bigger, it was harder to subsidise the cost of sending messages, even though telecom operators got a big volume of users. Stringent regulations also put a dent in their plans and all in all, meant that SMS Gupshup was haemorrhaging money, being able to neither monetise nor subsidise, no matter how many messages were being sent or how much money was being spent. In the end, they became an enterprise messaging platform, which meant businesses could help build conversational experiences across marketing and sales and have messages sent like OTPs, sales support and booking and payment confirmations.
Similarly, Fractal Analytics, an AI company, which started more than 20 years ago, took a lot of time to become a Unicorn, which it did in 2022. A significant part of the initial few years was spent just prepping the market and creating awareness around artificial intelligence, because if it had unleashed its true potential at that time, it would not have a market ready for its capabilities.
Sometimes, there may also be the desire to go after something that’s hot, without truly understanding its essence. Some people built crypto startups, not because they understood the principles of cryptocurrency or Blockchain, but maybe, because it’s a buzzword and they ended up failing hard. Some may also raise too much money too early and force their startups to grow much earlier and quicker than is feasible for the founder. This could jeopardise a stable financial course. On the other hand, one may not go for any funding at all and lose out on market share. So, it gets tricky.
The fallacy is that you can figure out the right part ahead through visualisation and prescience, that you can create 14 million outcomes in your head to figure out how your startup can become successful. This is called the “introspection illusion”, thinking you could learn what you desire through sheer intellectual contemplation. But, you’re not God. Mistakes are very much part of the process and it’s the only way you can learn and move forward. Just do yourself the favour of not disregarding your mistake and wringing it out for every possible lesson you can take from it to build your future. It’s the due you pay for a successful startup.
Shrija Agrawal is a business journalist who has covered startups and private capital markets before it was considered cool in India
The views expressed are personal