Compared to a few years ago, Indian startups now have easier access to capital, mentors, and there is lesser taboo associated with starting a new venture. But the startup boom has brought out new challenges – lot of crowding in ‘upcoming sectors’, founders unable to grow their ventures beyond a certain point, etc. Only a small percentage of startups are able to sustain themselves and grow and expand. Thus, what is the secret sauce that differentiates the successful ones from the rest?
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At the ‘Startup India’ event in Delhi, Adil Zainulbhai, Chairman of the Quality Council India, hosted an interesting panel discussion with Venk Shukla, President of TiE, Varsha Rao, Head of Ops, Airbnb, Kunal Bahl, Founder of Snapdeal, Vinod Dham, Founder of Indo-US ventures, Bhavish Aggarwal, CEO of Ola, and Dilip Chabria, Founder of Team Indus.
Bhavish said “The answer to that is contextual to sector, maturity of the startup, but in general startups need to look at everything as opportunities. In India, most early-stage companies are faced with daunting tasks because of lack of infrastructure, which companies in the western countries don’t have to worry about.”
Kunal recalled that the early days at Snapdeal were not very easy. There were very few investors around then and getting an appointment with them was also a difficult task. He said, “You need to find good founders and early employees to help you stick out the initial stages. Attending networking events like these are also going to serve as catalysts for entrepreneurs.”
Based on Venk’s experience of working with startups from different countries at sectors through TiE’s ‘Billion Dollar Babies’ initiative, he shared, “You can compare startup’s in Silicon Valleys to redwood trees – lean and tall, while Indian startups are like banyan trees –more widespread and stout. The two differ mainly in terms of mindset.”
He added, “Globally successful companies do one thing well and say no to things that are not part of core competency. But in India, I don’t understand why, many startups tend to spread out and do a lot more which they are not the best at, but do so based on customer feedback.”
Varsha from Airbnb went on to describe the early struggles the founders of Airbnb faced and how they went about building the company on relationships. Early-stage startups should focus on their product and solving problems rather than business plan and growth in the early days. She said,
It took Airbnb a couple of years to really take off. What worked for us was getting close to the community and understanding what people really want. By solving a few key problems, you can dramatically change user growth.
Vinod explained how early-stage startups should leverage and learn from their early customers. They had grandiose visions during their initial stages of their venture, but turned out to be a disaster. Cisco was their early customer and a strategic investor as well. Vinod shared,
We shared our concerns with Cisco and explained the issues we faced. They still believed in our team and shared a pain-point they faced related to VOIP and asked us if we could build a 256 channel chop for them. We did so and sold the company to them for as they had great ties with Broadcom and knew how to take the company forward.
Dilip from Team Indus believes that passion, honesty trump everything else. He recalls that during their early days working on the Google Lunar mission, people didn’t take them seriously as they didn’t come from aeronautical backgrounds and lacked the necessary experience. He found that whenever they tried to interview people for roles, the people they were speaking to would turn the tables and try to verify their credentials instead. He said, “But we stuck with it and in the end realised that if you stay true to your vision, people will eventually start supporting you.” Their mantra is – aspire, believe and create.
Here are some of the highlights from the audience Q&A session and interaction
Vinod believes that early-stage customers are the best teachers for a startup. Once your product starts solving a problem for one customer, many other players in the space will also want to get access to your product. Word of mouth and organic growth are what early-stage startups should focus on. If the foundations are strong, it will be much simpler to engage customers at later stages.
On being questioned why investors generally do not back startups in the hardware space and instead focus on other sectors more, Vinod said,
I don’t think VCs are averse to funding startups in different sectors. The issue right now in India is that there is a wave of ‘unicorn fever’ and VCs are only focussing on ‘hot sectors’ and food tech has been their choice for some time.
Vinod elaborated how he had faced issues raising funding for his own tech startup and had to cut down on their digital marketing budget and write blog posts himself.
On being asked if exploring multiple revenue stream is a good idea, Venk responded,
If the two revenue streams are relevant and synergetic then it makes sense. But if not related, and you are not best in what you do, it could be disastrous. Always focus on what your startup is good at.
Kunal believes that most innovative early-stage startups generally have to struggle to reach their first hundred customers. He said,
If what you do requires a change of behaviour, then customer acquisition takes time. In our early days at Snapdeal, we reached out to our friends and family to get feedback. Most of them felt that there wasn’t enough variety online and smaller local players were having difficulty reaching their target audience.
Bhavish added, “If you build something useful, then customers will come to you. Initially, it may be difficult to reach more people as your venture may not have a marketing budget. At Ola, we learnt a lot by talking and getting feedback from our early customers.”
Varsha too believes that early-stage companies should focus on talking to potential customers. She shared, “In the early days, Airbnb did almost no overhead marketing. We spent time and effort in going to different locations and understand the needs of our communities. Only later did we accelerate our growth through marketing. It is better to have a small number of customers that love you, rather than a lot that just like you.”
About multiple companies that try to go after the same problem, Kunal believes that competition is good. He said, “It is hard to build a company if it is the sole company in that space. Competitors bring out the best in you and keep you on your toes.”
Bhavish believes in the philosophy of the more, the merrier. He believes that companies should focus on building a safe and useful product for all parties concerned and the rivalry and competition will be sorted on its own.
Vinod believes camaraderie and good relationships keep good companies and people together, rather than equity and money. He said, “When our startup initially failed it was really hard for us. We had to tell our core team to scrap their idea and work on something totally different. It could have destroyed our company, but we stuck together.”
Varsha believes that company culture plays a key role in team building. She says,
It is never too early to think and build on a company’s core values and culture. This will help you scale faster globally in the long run. Social media played a big role in our growth at Airbnb, as it helped enable authenticity, which is very important in building a two-sided marketplace.
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