Here’s how startups need to solve business conundrums, explains Cashfree’s Ramkumar Venkatesan
It is important to address conundrums that arise while starting a business venture because decisions have a direct impact on several business parameters, and in any given situation, a yes or no answer is very important.
And to help budding entrepreneurs address these confusing conundrums, Ramkumar M Venkatesan, Senior Vice President,, held a masterclass on ‘How We Addressed Conundrums In Our Rapidly Growing Startups’ at TechSparks 2021.
Types of conundrums
Beginning with the importance of decision-making, Ramkumar said that in today’s rapidly changing world, the decision throughput is very important. “We’re not going to have perfect information for all the decisions. So, if you can make decisions with 80 per cent of the information, that’s going to make you so much better,” he said.
Ramkumar noted that the major conundrum that most entrepreneurs faced was whether to go to market faster or to build it right. Listing out reasons why founders usually want to go to market faster, he said that they want to acquire customers quickly, ensure that the innovation on new products and features sell, release products before the competition, and acquire the first-mover advantage.
He noted that some assumptions that need to be analysed by founders before going to market faster are understanding that the quality, security, and scaling take time, contemplating that the company is smart, and the product will be built right, and if any problem does arise, it can be fixed quickly.
On the other hand, he listed out the reasons why founders also must focus on building a product right and said that customers prefer to buy high-quality products, innovations need interruption-free time, second movers can also take advantage, and that Murphy’s law will kick in at some point. He added that some assumptions that need to be analysed by founders before deciding to build it right are determining if customers would be willing to wait for their products and if their competitors will take time to launch their products too.
Another conundrum that most founders face is whether a process is a decelerator or an accelerator. Ramkumar said that the slow behemoths that use the process as a decelerator get beaten by other startups, and most of them do not like processes for themselves. He added that founders who preferred to use the process as decelerators needed to check if behemoths were successful with the right processes, and if a process that worked for a family would also work for an entire town, village, or city.
On the other hand, founders who used the process as an accelerator found that teams are a complex network of dependencies, and most customers like smooth processes. Ramkumar said that most founders who prefer the process as an accelerator need to assume that if it has worked for someone else, it will work for them as well. He added that founders need to know that all processes add value and will solve all problems.
The final conundrum that Ramkumar shared with the audience was the dilemma of addressing tech and product debt right away or saving it for later. He said that founders who focus on addressing debts later usually face tight deadlines for product launches. He added that most founders feel that they don’t need to change a product if it is working well, and don’t want their existing customers to migrate. He noted that founders need to analyse assumptions like Sunk Cost Fallacy and massive rewrites.
Talking about managing debt right away, Ramkumar said that while the debt’s interest slows down the team, people have time to think and innovate, and founders can depend on build vs buy decisions to manage debt. He added that in this case, it was necessary for founders to figure out if they can complete a tech debt project quickly, and if it was always better to rewrite than fix it.
How to overcome conundrums
Ramkumar mentioned that there were four major steps involved in the decision-making process, which were as follows:
- Identify: It is important for founders to identify their growth situation based on parameters like the size of the customer base, revenue, team size, etc.
- OKRs: Focusing on objectives and key results is important as the type of OKRs decide what kind of decision needs to be taken on that basis.
- Experiment: Ramkumar said if a conundrum turns out to be confusing where founders are unable to make a decision, they must keep an open mind and should not be afraid to experiment.
- Measure: Founders must prepare a set of metrics to evaluate and re-evaluate their situation and objectives, and then make a decision based on that.
Talking about the timing of addressing these conundrums, Ramkumar said that there are three factors that determine the timing: the customers’ axis, company axis, and market axis. He also discussed the various metrics when it came to making a decision about various conundrums that he discussed.
He said that in case of a go-to market vs build it right conundrum, it is important for founders to focus on metrics like product usage, uptimes, and lead times of bugs and features. Similarly, in case of a process deceleration vs product acceleration, it is important to determine metrics like predictability, deployment frequency, quality, and onboarding time for new team members, he said. Finally, he added that metrics like product debt burndown and upgrade frequency were important to determine the decision to be made in case of addressing product and tech debts.
Concluding his session, Ramkumar said that quality and time are not conflicting requirements in the medium term, and that the right processes will accelerate innovation automatically. “A little bit of debt is needed, as in growth phases, you take debt and grow. But, just like the financial debt of a company, it needs to be managed actively,” he said about addressing debts.
Finally, he said that addressing startup conundrums is always dependent on the situation of the startup, and it is highly important to align business, product and tech objectives to address them efficiently.
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