Opinion

What challenges and opportunities technology and business present for startups

Vishal Gupta
29th Mar 2018
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A company that is able to build a technology product that disrupts a problem space will always beat other companies, while business strategy is the key to its continued success.

India with a vast market has many interesting challenges and provides many opportunities to solve them. The good news is that the startup environment is maturing very fast to be able to take on these opportunities.

Having mostly worked in Indian startups, large as well as small, and having interacted with multiple startups, I can tell that an entrepreneur is at crossroads all the time. It is important that one makes the right choices, especially on technology and business, as there are always repercussions for these choices.

It is largely the execution of the startup that defines success or failure. Other factors such as market conditions, competitive scenario etc., can be addressed with clear thinking on the execution front. While there is no one formula that fits all, let us look at the challenges and opportunities that both technology and business present for any startup.

Technology

Companies that define what technology product will disrupt a problem space will always win over companies that are simply using technology to improve existing products and processes. The typical choices to be made are:

In-house or outsource

Owning the technology stack provides agility and flexibility and that is how the core need for any startup is best achieved. What works is building the core solutions in-house and choosing open-source or enterprise for peripherals. Especially with the maturity of open-source software, getting off the ground is easier with a fully owned technology platform built using open-source technology stack.

Example: While customer service is important one can rely on an enterprise product whose core focus CS agents require solving for tools. At the same time if one is solving for warehouse efficiency, then one cannot depend on an enterprise tool for supply chain management.

For today or tomorrow

Many startups fall into this pitfall. If they do not take the long-term view, and rely on a shortcut approach there will be lots of patchwork required later. The long-term view should be factored in during the design process itself.

Example: If one is not thinking about the possibility of extending the above warehouse solution to multiple businesses and does not build multi-tenancy in the design, the cost of refactoring or rewrite in the future will be very high.

Slow or fast

Go to market is always a rush, but make wise choices by differentiating between a hack and a capability. If the right solution can be built by spending a little more time, then just avoid the hack.

Example: An automation logic can always be built using if-else instead of a simple rule service. However, imagine the migration cost of those hundreds of instructions when the business is booming and one needs to incorporate a sophisticated rule engine with ML and AI support.

Hiring pace

Hire slow, at least in the early stage. Make sure the core team is highly talented as each individual is wearing multiple hats. Based on my experience, hiring is always the key and one must focus on quality than quantity. An excellent hire is well worth the wait than hiring mediocre or risky candidates.

Basics

Get the basics right from day one. Automate as much as possible, test coverage and make the right architecture choices. Any tech debt one builds will always be difficult to get rid of at a later stage as business will grow and business priorities will only increase in magnitude.

Business strategy

Getting the business strategy right is the second pillar to any startup’s success. Just to emphasise, I am talking about the execution aspects here. I have seen multiple startups ignore the execution basics or make assumptions, which fail as the business grows.

End goal vs micro goals

While the end goal is always very important, it helps to set some micro goals. When one achieves these goals, it brings in a sense of achievement and provides timely validation from the market.

Customer need vs self-belief

Most entrepreneurs are headstrong, and rightfully so! Finally, success will be driven by market and consumer choices. One will fail on a few hypothesis and succeed on a few. The key thing here is to fail fast by frequently validating it via the customer and the market.

Sustainability

Unit economics has to be thought of from day one, and growth should only be treated as a marketing expense. If done right, one can switch to sustainability at will by choosing to reduce the marketing expenses on growth.

Scalability

Startups often ignore factors around scale. It is very important to chart out a plan to scale up at a minimum cost. Therefore, if it means putting an effort into automation so that operational costs are under control, even at the cost of speed or growth – one should do it.

Growth rate

Here I am talking about growth rate and not growth numbers. While the numbers attract an investor, do remember usually investors are more excited by the sustainable and scalable growth rate. We have already seen enough large startups fail when they chased numbers without a focus on efficiency and sustainability of growth rates.

Shiny objects

In any business, there will always be multiple problems that need to be addressed, and the temptation is always high to go for the ‘shiny objects’. I have seen many businesses fail because of either chasing too many objectives or missing the complexities in the path to achieve their goal. A focused and restrained approach helps as it is important to separate distractions and future bets from one’s core goal.

Investor pressure

If investor pressure is the only thing driving one’s business strategy - do introspect. Either it is the wrong strategy or one is working with the wrong investor.

Good news is, Indian startup ecosystem is evolving fast and there is palpable excitement. Many entrepreneurs will finally emerge from both successful and failed startups, and they will fuel future successes by drawing from their learning and experiences.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

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