Startups have to keep an eye on revenue as they scale
What is the most important topic of discussion when investors and entrepreneurs get together? Scale, revenue, and growth tend to be the most common ones.
This week marks a special highlight for India’s entrepreneur community: the annual TechSparks in Bengaluru with its focus on disruptive technologies, sustainable scale, and startup fundamentals, among other things
The ‘Subject of scaling up and monetising in a mobile-first economy’ saw panellists Ankita Sheth, Founder, VistaRooms; Hiro Mashita, Founder and Director, M&S partners Pte. Ltd; Nao Murakami, Incubate Fund; Raghav Gupta, BlaBlaCar; Yogendra Vasupal, CEO and Founder, Stayzilla come together for an exciting discussion.
Vista Rooms is a chain of budget accommodation in India, Maldives, and Sri Lanka, which builds credibility for customers to find budget places to stay and helps hotels gain visibility and find customers.
Hiro, who moved to India a few years ago, has around 34 investments in the country. His focus is on early-stage startups in India in the mobile internet space.
Stayzilla was founded in 2005 and has been moving with the times. Their focus was on rooms but as many players emerged in the market, they took stock of things in 2014 and began focusing on stay-at-home places across 100 cities and towns. He is looking at it as a ‘caring economy.’ In fact, Yogendra is host people at his home too. He is hosting TechSparks attendees currently.
Nao noted that Incubate Fund focuses on seed stage and Series A companies in mobile, game, and internet media startups in Tokyo and Singapore and leads in these sectors. Nao is now looking at India and the companies in the early stage in the sectors that the fund has its focus on.
BlaBlaCar is a global company headquartered in Paris and provides city-to-city carpooling. They are trying to solve the problem of waitlisted train tickets and help people travel in a cost-effective manner given that fuel in India is expensive.
Some excerpts from the panel:
Scale and revenue
Regarding some of the best practices for startups to achieve scale while keeping an eye on revenue both Ankita and Yogendra agreed that for most entrepreneurs it works differently.
However, according to Yogendra, "'Startups' is a sexy name for business and business needs to make money.”
For Ankita, both go hand in hand but she says, “ You have to think of making revenue from day one.”
From the perspective of the investors, according to Hiro, who invests in early-stage startups, “For a mobile media company we do look for numbers. In a B2B however, you look at the company and see if it is breaking even and how it is going to accelerate thereafter.”
Ape or innovate?
Is it good to borrow from some models or practices from abroad and vice versa rather than simply innovate.
Raghav cites how trust and security are major concerns with the customers in India and how as part of their security and trust measures they have started taking customer ids. Since this model worked in India, they decided to put it in practice in Mexico, Turkey and Brazil.
According to Yogendra, who has a CTO and CPO from Silicon Valley, the one thing that we should follow or ape is the customer experience that the companies in the West provide to their customers. “We set low benchmarks for ourselves. We have to look at how we can match up to that user experience.”
Exchange is good and Hiro talks about he has seen such exchanges happen and there is a lot India can learn from Japan, China, US and vice versa.
So while entrepreneurs choose to take different ways to scale, it is important to keep in mind that making revenue is important. You need to keep a close eye on the revenue as you scale, and if you are a mobile company then you need to pay attention to the customer too.
To conclude, in the words of Raghav, “Indian companies can take decisions a lot faster, and that is something they should use to their advantage.”
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