From idea to investment: startup success tips from 15 outstanding founders
Aspiring entrepreneurs looking for insights on how to proceed from trend-spotting to product-market fit will find a wealth of advice in the book, No Shortcuts: Rare Insights from 15 Successful Startup Founders. It is a practical blend of storytelling and business analysis across sectors.
The book is the result of an 18-month project, with interviews of founders such as Girish Mathrubootham, Nithin Kamath, Jaydeep Barman, Gaurav Munjal, and Tarun Mehta. They founded Freshworks, Faasos, Unacademy, Zerodha, Slideshare, Pulse, Aspiring Minds, Madhouse/Morpheus, Akosha, Ather Energy, Instablogs, GreyB, LikeALittle, Wingify, and Fashiate.
Nistha Tripathi studied computer science at the University of Illinois, Urbana Champaign, and dropped out of an MBA programme at NYU Stern to venture into the startup world as the founder of Festsy and Quizzlr. She returned to India in 2012 and founded Scholar Strategy, an education counselling company.
Nistha was a speaker at the Bangalore Business Literature Festival 2019, where her book was a finalist for the BBLF CK Prahalad Best Business Book Award. The winner was Alok Kejriwal’s Why I Stopped Wearing My Socks (see my book review here).
Being an entrepreneur herself, Nistha’s questions and takeaways bring more depth to the book as compared to other titles. The founder interviews, illustrated with photographs, provide realistic insights on the struggles, contradictions, and messiness of entrepreneurship before eventual success.
Focused on Indian entrepreneurs, the book is inspired by Founders at Work: Stories of Startups' Early Days by Jessica Livingston. The profiled startups are from a range of sectors: analytics, automotive, food, e-commerce, media, entertainment, and fintech. Some are bootstrapped, others are venture-backed; some have pivoted, others have shut down or been acquired.
The 15 profiles span 280 pages; each chapter ends with highlights of the entrepreneurial journey. Here are my 10 key clusters of takeaways from the book. See also my reviews of the related books Young Turks, Startup Land, Cut the Crap and Jargon, I Love Mondays, China’s Disruptors, The Prosperity Paradox, and Arise, Awake.
1. Spot trends and problems
Spotting trends, transplanting business models to new markets, and solving problems for oneself and for others are effective ways to begin the entrepreneurial journey. For example, Girish Matrubhoom worked in IT companies like HCL-Cisco and Zoho, and spotted an opportunity in helpdesk software when he experienced a shipping problem. Freshdesk was launched in this space, and drew insights about pricing and glitches from customer forums about competing products like Zendesk.
Zerodha founder Nithin Kamath worked for Reliance Money and became quite popular in many trading firms before spotting an opportunity for discounted flat-fee brokerage. “I had done 20,000 hours of work in this industry before even starting something,” he says, emphasising the importance of domain knowledge.
Paras Chopra was dabbling with tech entrepreneurship since his teens, and decided to work in online marketing. Spotting the difficulty for marketers in using Google Website Optimiser, he launched Wingify’s Visual Website Optimiser for A/B testing.
Successful businesses are built on need, persistence and rare insight, according to Prasanna Shanker, founder of “flirting” app LikeALittle. He spotted a pattern in the way FitFinder was taking off in the UK, and decided to replicate it in the US.
Husband-wife duo Nandini and Ankit Maheshwari were early trailblazers in the Indian blogging landscape, and their collaborative platform Instablogs (later renamed as Instamedia) raised funds from the Times of India group. It was later sold to investors from Dubai and Canada.
Tarun Mehta spotted an opportunity for electric vehicles on par with petrol counterparts. He founded Ather Energy as a vertically-integrated manufacturer of electric scooters, thus positioning himself in the tougher segment of hardware startups. Though the journey is long, the impact is large and barriers to new entrants are high.
The founders of Slideshare (‘YouTube for presentations’) spotted the opportunity for the platform during a Delhi BarCamp. They noticed that speakers were finding it cumbersome to use email and pen-drives to share presentations quickly.
Ankur Singla was a lawyer in London and returned to set up a legal-tech startup in India. He launched a platform for legal documents, but spotted an opportunity for consumer complaints redressal. His startup Akosha pivoted to HelpChat and then to Tapzo.
Jaydeep Barman’s love for food from his home city Calcutta manifested itself when he was working in Pune – he brought a cook from home to launch the first Faasos kitchen. It was kept running while he studied at INSEAD and worked in London, and then scaled up via online ordering and “dark stores”.
Sameer Guglani and his wife Nandini Hirianniah used to watch Netflix when they were living in the US, and decided to replicate the model in India. As compared to mature markets like the US, their startup Madhouse was almost four companies in one – handling logistics, call centre, payment, and content.
Narayana Murthy and Nistha Tripathi at BBLF 2019
2. Business model
Many of the featured startups grappled with freemium models and SaaS pricing points before using techniques such as benchmarking with salary levels and number of hours saved by using the product. Wingify used “value-based pricing” in this regard.
Unacademy decided to use a two-sided model to connect educators to learners, rather than making the content itself. Time limits were set on individual lessons, and tools were designed for Indian conditions such as low bandwidth in smaller towns.
Opportunities were spotted in areas like government exam preparation and teaching coding in Hindi. Monetising opportunities identified are paid events to meet celebrity educators for discussions, and subscriptions to save lessons offline.
Instablogs tapped high-end advertisers like Mercedes; it also had sponsored posts and syndicated content. SlideShare roped in advertisers through Google’s ad network, and also added SaaS-based subscription for content marketing.
Zerodha invested extensively in its technology platform, including reliable leased lines. “As we have scaled, we became a car that is going at 200 km per hour on a road that can only support 100 km per hour,” Founder Nithin Kamath jokes. The platform also has an uncluttered and easy-to-use interface.
Ecommerce tool Fashiate was based on deep learning algorithms to help shoppers locate items via image recognition. The founders zoomed in on the fashion sector where images were an important purchase consideration, and eventually sold the product to Snapdeal.
Rather than assembling electric vehicles with components from China, Ather Energy decided to build the overall product in India. Instead of just re-engineering existing products or re-conditioning them to Indian conditions, it nurtured the mindset and tenacity for full production.
Instablogs developed its own content platform instead of launching on others like Wordpress; this helped with greater control over features and business opportunities for monetisation. Analytics helped monitor traffic patterns and devise strategies such as cross-promotion, and dashboards helped contributors manage their content.
Slideshare polished its presentation player to deliver a fast user experience. However, for some time it did not pay adequate attention to its codebase which became shabby (‘technology debt’ from poor code management).
Varun Agarwal based the technology for Aspiring Minds on the science of adaptive testing along with educational psychology. Large data sets helped validate the business model for recruitment; the product was designed for Indian constraints like poor Internet connectivity. The product is scaling to other emerging economies with similar challenges in hiring and testing.
4. Understand the customer
Empathy and dialogue with customers have helped entrepreneurs become successful. For example, Instablogs fine-tuned its understanding of the needs of content contributors when it added citizen journalism features to its blogging platform. The founders tracked trends in news in sectors like gadgets.
Chakshu Kalra, of GreyB IP services, connected with business clients by showing openness and vulnerability, particularly with Westerners. For example, he would ask them for business advice in solving problems, and they would give suggestions while also opening up about their own issues. “Sales is such a different game than what most people think it is,” he observes.
Faasos tests new recipes regularly for ‘UMD’ factors – unique, memorable, and delightful. Feedback from customers is frequently collected. Freshdesk conducted a comprehensive survey on its customers to find out what features they liked and wanted.
5. Marketing and channels
Girish Matrubhoom advises figuring out which marketing channels work most effectively, depending on the context. For Freshdesk, BuySellAds turned out to be more suitable. Free users were tapped for viral branding, with ‘powered by’ messages.
The choice of name is also important; ‘Zerodha’ stands for zero obstacles (rodha means barrier in Sanskrit). Freshdesk was later renamed Freshworks. Zerodha relied on word-of-mouth publicity and never spent on paid marketing.
Wingify tested earlier product versions via posts on Hacker News, and published case studies of businesses effectively using its tools. Using free content in this manner improved SEO. Unacademy tapped celebrity influencers to add credibility to its platform, such as Kiran Bedi and Shashi Tharoor.
Instablogs interviewed celebrity bloggers to increase its own traffic; some of the interview questions were also crowdsourced, leading to further viral marketing. Slideshare promoted outstanding presentations on its home page, and also organised annual contests for the ‘world’s best presentation’, thus creating cascading traffic.
Ankit, of Pulse, turned negative news into PR when it was sued by the New York Times, apparently for not sharing revenues with publishers. Ankit contacted the Wall Street Journal for a story on how he had not done anything illegal, and the story generated a lot of publicity (eventually things were settled with NYT).
Akosha cultivated B2B SaaS clients by allowing customers to send in their complaints but not publishing them online. It also offered brand monitoring solutions by tracking social media and offering benchmarking data with a client’s competitors. For B2C, it offered an app for consumer issues beyond just complaints. Founder Ankur Singla believes constraints can boost creativity.
Chakshu, of GreyB, uses human-friendly messaging and content on its website, with first-person conversation and names of actual people for connect invites. It found LinkedIn and Quora to be effective marketing channels.
LikeALittle nominated students as ‘CEOs’ of their campuses, thus becoming brand ambassadors. This helped develop its community in a fast and scalable manner.
(L to R) Suresh Narasimha, Nistha Tripathi, Varad Rajan Krishna, Shradha Sharma and Shoaib Ahmed at BBLF 2019
6. Talent and culture
Freshdesk created an effective startup culture by giving employees operational freedom instead of strict rules. Zerodha also gives employees a fair degree of independence. Wingify, with an international customer base, built its brand to attract employees and not just customers.
Gaurav Munjal put his entrepreneurial DNA to good use in bringing aboard the founding team for Unacademy, roping in classmate Roman Saini (who himself dabbled with a tourism startup earlier) and former colleague Hemesh Singh (from their startup FlatChat).
Unacademy ropes in interns as a frugal staffing strategy. Ather Energy also burns less money by hiring interns. GreyB hires 15 new freshers each year to keep the talent pipeline flowing.
Aspiring Minds lets candidates for sales positions ask questions at the end of the interview; this yields clues about their selling abilities. Employees are hired for their ability and not just experience, particularly when it comes to selling new concepts; they should be open to listen and learn.
Faasos developed an entrepreneur-in-residence programme to hire young professionals with a sense of ownership and willingness to take up challenging new tasks. People from outside the food industry were preferred, and CVs were not needed; the job came with freedom and responsibility. Innovation happens from experimenting outside comfort zones, according to founder Jaydeep Barman.
Madhouse had no hierarchy in the company and everyone was called by the first name. Employees were contacted or even poached from cafes and fast food joints. People were hired for their potential to be future leaders, and not just salary seekers.
Slideshare hired a diverse range of people, across a number of channels. Some startups hire through referrals, but Slideshare was against such ‘inbreeding’.
7. Funding and acquisition
The decision to take funding depends on the maturity of the market, availability of customers, and the status of competition, according to Girish Matrubhoom. External money should be taken only for superfast growth, and entails loss of a certain amount of control, cautions Paras Chopra.
Good investors help with business advice, governance, business connections, and recruiting, according to Varun of Aspiring Minds. At the same time, delaying the funding can get a better valuation.
Fundraising takes up not just time but “a hell of a lot of mental bandwidth”, according to Ather Energy’s Tarun Mehta. Rejection makes the founder battle-hardened, and a good negotiator. Building good prototypes helps bring hardware investors and buyers on board.
Instablogs raised funds from Vishal Gondal and Sameer Bangara, and later from the Times Group. However, ad revenues went down as players like Google AdSense became dominant, and the startup was eventually sold off.
The husband-wife founding team of SlideShare faced resistance from VCs who did not want to invest in family-run startups. Eventually, it raised funds from Venrock; it formed a partnership with LinkedIn, which later acquired the startup. LinkedIn also acquired Ankit Gupta’s Pulse app for $90 million.
Madhouse began to face competition from large and well-funded players in the movie rentals business, and eventually was acquired by SeventyMM. However, the founders did not find a good culture fit with the larger firm and subsequently left.
Timing is key in deciding when to sell the startup. Fashiate juggled acquisition conversations with Flipkart and Snapdeal before going with the latter. Acquisitions involve a lot of politics, and it helps to have a good lawyer on board.
LikeALittle experienced viral growth in its early years, and rejected acquisition offers from Facebook and Google. But the market changed and the startup lost product-market fit, eventually shutting down. CommonFloor acquired Gaurav Munja’s Flat.io (flat brokerage deals); Gaurav then developed FlatChat to connect renters and flatmates. Quikr would later acquire CommonFloor.
8. Knowledge and learning
Useful books cited by the interviewed founders include Blue Ocean Strategy, Traction, Tribe, Hackers and Painters, Execution, First Break All The Rules, Zero to One, The Innovator’s Dilemma, AntiFragile, The Snowball, High Output Management, Onward, The Hard Things about Hard Things, and The Crossroads of Should and Must. See YourStory’s book review section for insights from many such publications.
Paras Chopra, of Wingify, advises founders to read business books beyond the usual startup literature, as well as publications like Harvard Business Review. Many tech founders are unaware of what a CEO role entails or what long-term strategy means.
9. Failures and setbacks
Some of the founders also discuss the failures and setbacks experience. For example, some ideas have a limited shelf-life, and when consumer tastes change the founders have no choice but to shut down and move on, as discovered by Prasanna of LikeALittle. Too much pressure during phases of low or high growth can surface conflicts in the founding team.
Aspiring Minds faced a tough time during the recession in 2008. It resorted to free testing for students and specialised tests for the few companies that were hiring.
“Failure is nature’s beautiful tool,” says Sameer of Madhouse. He reinvented himself as a mentor and investor by founding Morpheus Accelerator, advising startups like CommonFloor and Instablogs. Morpheus incubated over 80 startups in six years, such as Practo and HackerRank. Sameer eventually moved on to pursue spiritual studies.
The book also sheds light on the importance of a supportive entrepreneurial ecosystem for nurturing startups. For example, Uncademy’s Gaurav Munjal benefited from startup communities and events around NMIMS in Mumbai. Zerodha tapped the startup ecosystem for further innovation and outreach by launching fintech incubator Rainmatter.
Ather Energy benefitted from the creation of a new dual-degree engineering design programme at IIT Madras. It received grants from IIT and raised funds from an alum in Silicon Valley.
Ankit Gupta founded news app Pulse as a design class project when he was at Stanford. “You just feel that entrepreneurship was in the air. You know the difference between a billionaire and a student at Stanford was just a few years maybe,” he jokes.
Ankit validated his app by showing it to customers at coffee shops and acting on their feedback. The ‘Steve Jobs’ moment was when the app was shown at the Apple conference in 2010. He also forged partnerships with Samsung and HTC for Android devices, and Amazon for Kindle.
Varun hatched his idea at MIT, which was bustling with startup activity. He founded the MIT-India reading group, where he came across reports on the low rate of employability of graduated engineers in India.
Though much has been said about the virtues of Silicon Valley, the hyperactivity can be noisy and distracting at times, according to Prasanna Shanker of LikeALittle. Too much pivoting can also come across as frivolous and show lack of commitment or focus.
In sum, the book offers a wealth of useful advice from entertaining stories. It is also packed with inspiring quotes, and it would be appropriate to end this review with the sample below.
If you know neither the enemy nor yourself, you will succumb in every battle. – Sun Tzu
Dripping water hollows out stone, not through force but through persistence. – Ovid
Risk more than others think is safe. Dream more than others think is practical. – Howard Schultz
The difference between perseverance and obstinacy is that one comes from a strong will, and the other from a strong won’t. – Henry Ward Beecher
To dare is to lose one’s footing momentarily. To not dare is to lose oneself. – Soren Kierkegaard
The real work of art is the result of a magnificent struggle. – Robert Henri
YourStory has also published the pocketbook ‘Proverbs and Quotes for Entrepreneurs: A World of Inspiration for Startups’ as a creative and motivational guide for innovators (downloadable as apps here: Apple, Android).
(Edited by Teja Lele Desai)