Pivoting to adjacent opportunities crucial for business continuity
The outbreak of COVID-19 and the subsequent lockdown measures to curb its spread has led many startup founders to think on their feet to spot and deliver solutions to a whole new market and ensure their business continuity.
To gather learnings and insights from founders that are rethinking their business operations and finding adjacent opportunities in this new environment, early-stage venture fundPrime Venture Partners hosted a webinar in partnership with AWS and YourStory, titled ‘V2A - The Vitamin To Aspirin Transformation’ on 17th April. Some businesses have offerings that were once seen as voluntary supplements, like vitamins, but are now indispensable to solving problems in the current environment, like Aspirins relieving headaches.
The panel consisted of Sachin Gupta, co-founder and CEO HackerEarth; Kumar Setu, co-founder Petoo; Srijan Raj, co-founder and CEO of EazyPG, and Abhinav Pathak, co-founder and CEO of Perpule, in conversation with Sanjay Swamy, Shripati Acharya and Amit Somani of Prime Venture Partners.
Dealing with the new normal.
Sachin began the webinar by giving an overview of how things have changed for HackerEarth, a B2B company that focuses on digital recruitment products for companies with a technical talent pool, since the onset of the pandemic.
“The COVID-19 pandemic has had an immediate impact on sales velocity. Once the dust settles, we believe we will come out strong as the products we provide are digital, and align with the remote working situation,” he said.
“We have stumbled upon an adjacency. In addition to having an assessment tool, we also have a remote video tool for peer programming. Organisations that used to rely heavily on face-to-face interactions now have a purely digital tool at their disposal that can take care of these functions,” said Sachin, adding that companies would continue to make use of digital tools to carry out these operations even after the lockdown and remote working norms are lifted.
Kumar Setu, co-founder of Petoo, a food and research company that focuses on Indian cuisine, believes that given the USP of their operations, there is a big opportunity in the food space.
“Indian cooking has been considered as an art, which is not scalable. But we have made it a science that can be scaled by productising our backend in the form of an assembly line. While it is unfortunate that we had to shut down stores due to COVID -19, there is an opportunity with the contactless kitchens that we have been building for five years now,” he said.
Srijan Raj, co-founder and CEO of EazyPG,added that EazyPG mobile app automates the E-KYC, rent collection, income expense management and complaint resolution for the owner and tenants. He said that he was hopeful that in the current situation, he would see a lot more of the 10 million owners of India’s real-estate rental ecosystem being on-boarded onto the app.
Moving from product-oriented to a service oriented mindset
When asked on how to finance new investments in this environment, and how startup founders should explore new opportunities, Sachin said that HackerEarth has gone from having a product-delivery mindset to a service delivery one.
“We have now buckled down to try and deliver a quick return on investment to the customer,” said Sachin, and to that end, the company has stopped taking up long- term projects.
“We have asked the sales team to hunt for prospects, and let us know exactly what the customer needs, and if they can provide us a Letter of Intent, and we will get our team of 15-20 engineers to work on it to deliver their requirements,” he said.
Sachin added that while the video space, which consists of the products developed by HackerEarth to carry out remote interviews, and assessments, is in demand, they are not committing to any projects unless it helps them retain existing customers or bag new ones.
Srijan said that EazyPG has always been product driven, and there has been a constant re-packing and incentivising of their offerings since the beginning of the lockdown.
“Three weeks ago, people started leaving hostels and PGs in droves, and we anticipated the fall in rent collections. We repurposed the sales team to reach out to owners and provide them packages and incentives like discounts to carry out rent collection online,” he said, adding that the number of owners who processed their payments online doubled since this time, while also diversifying their offerings to include products like DIY marketing, making salary payments to staff and billing services, among others.
Taking a compassionate, but pragmatic approach with customers
When asked about their interaction with customers who are seeking deferment to payments, Sachin said that in HackerEarth’s case, as they are purely B2B, they sign annual contracts with small businesses.
“We received a lot of feedback that our customers would be able to extend their contract as they were not sure of being able to incur the cost in the future,” he said. So, on a case-to-case basis, the company provided extended duration of the product with limited use in the hope that it will carry on with a long-term relationship.
“My biggest takeaway from this exercise is that as much as possible, focus on and try not to lose existing customers as it is they who are going to help you through these times,” he said.
Pivoting to adjacent opportunities to cut through the noise
When asked how customers are responding to Petoo’s offerings, and how the company is cutting through the noise in the food space as people are only worried about securing the essentials, Setu said that they found an opportunity to bring products that were used wholly in the backend for two-and-a-half-years directly to the customer.
“Unlike a typical restaurant, we work in a manufacturing environment where we have productised the backend, which consists of a base, the topping and the garnish. The base is a gravy that has been partially cooked, packaged and taken through a sanitisation process to be used internally,” he said.
Setu said that in these times where food hygiene has become a top priority, the team at Petoo changed the sales model to leverage the contactless production and packaging to provide easy-to-make food products that can be heated and consumed, and availed from IoT-based vending machines.
“We have also launched a Cloud food platform, which is a meal subscription service targeting working couples with children at home, or bachelors staying at PGs and hostels who want the taste of home-cooked food with convenience,” he said
From Vitamin to Aspirin: New perspectives means new opportunities
Srijan said that these times have radically changed the way EazyPG’s target audience viewed their products.
“Earlier, our products were seen as a vitamin as owners treating their property as a passive income with little to manage. Now, when they are locked down, they have realised that they can manage their property from the safety of their homes, and this has led to an increase in leads in April,” he said.
“So the product has not changed, but its importance has changed significantly in the eyes of the consumer,” he said.
Sachin has a similar experience with HackerEarth. “ For many organisations, our video products were a vitamin, but in the current situation, we expect our business to increase with this solution being a key contributor.” he said.
Sachin also added that founders need to acknowledge the severity of the situation and must figure out ways to last. “That being said, it is important to not lock yourself in the survival mindset, and keep your founder's optimism and creativity ongoing,” he said.
Using existing resources in short span of time to add real value
Abhinav spoke about how the team at Perpule saw an opportunity in these current times to link food and grocery retail chains, whose revenues exceed $45 billion in India, with the comparatively underpenetrated $2 billion online food and grocery segment and help citizens secure their essentials in a contactless manner.
“Retail CEOs were being pressured by government authorities to figure out strategies of carrying out operations amid lockdown. We had always been in close contact with the CXOs of these retail outlets, and we decided to come up with a solution.”
Leveraging their existing resources, Abhinav said the team at Perpule came up with StoreSe –a group ordering initiative where apartments complexes and housing societies can collect orders from individual households, and are connected to a retail outlet so that they can have their essentials delivered to them in a contactless manner.
“The market needs something, if you can build it on your existing resources, and push it out within a short span of time, somewhere around two to five days, that would be of true value,” said Abhinav.
Fighting incumbency biases and tapping into adjacencies:
After an insightful Q&A session with the audience, Amit Somani of Prime Venture Partners gave his concluding remarks.
“The old world and the old businesses with it have gone. There will be a need to spot and work towards new adjacencies in this new environment.”
Amit acknowledged that since there was a lot of uncertainty concerning the future, the exercise will amount to some amount of crystal ball gazing, but it is a reality to ensure business continuity.
“There could be a possibility that those at the top of their respective business environments could have an incumbency bias. To counter this, there will be a need to brainstorm and find these new avenues from the outside.” he said.
Amit also said that while there is a need for shift in gears in terms of business operations, care must be taken of the extent to which there is going to be the change in DNA as it is difficult to to quickly reorient one’s self to avail any opportunities that might come after the end of the crisis.