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The chicken and egg conundrum

A problem every entrepreneur encounters & everyone has their own solution. Creating a global brand involves similar principles.

Wednesday April 19, 2017,

6 min Read

The chicken and the egg. The eternal dilemma. I'm sure evolutionary biology has an answer. In common parlance, it represents the same dilemma as in where does a circle start and where does it end. We face such dilemmas regularly in almost everything we do in life. After all, not knowing the future means every decision ends up becoming a dilemma. However, the particular problem of chicken and egg is specific to issues where you wouldn't know how to start as the tools needed for the action would only become available as a result of your actions.

A few years back, when I was in the Navy, one of my commanding officers was a jolly old Commodore. This gentleman was a suave, cultured, well read and well-spoken officer. More Dumas, less Lee Child. He was one of my mentors. One of the things he used say whenever we came across a particularly sticky problem, and I still distinctly remember, was a catchphrase from Catch 22, where the main protagonist, Yossarian, is "stuck up a creek without a paddle".

No one understands the concepts of 'chicken and egg' and 'stuck up a creek without a paddle' more than the founder of a start-up. While it's common for top MBA/engineering students to start-up after completing their degrees, and in many cases it's a fad rather than real passion, sometimes even escapism from the real work life, you cannot ignore the fact that start-up entrepreneurs are the least paid, highest risk taking and highest burnout bunch out there, somewhere in between firemen and doctors in government hospitals.

We have always had the visionaries. Only we used to call them by different names. Tesla, Edison, Ford were no different from the Jack Ma and Elon Musk of today. There is a very basic difference between a business and a start-up. Both intend to make money, but start-ups typically have a different end game. Traditional business aim to make money, sometimes innovate on process, but are not geared to make a difference or change the world. Clichéd as it is, the real start-ups out there are changing the world even as you don't realise it. From deep learning & AI to healthcare, to space travel, to your groceries, start-ups make the world a better place, create jobs and, essentially, help civilisation to flourish.

While we mostly realise the impact of start-ups, we do not really understand the exponential pace at which the world is changing around us and almost everything is being reimagined. I brought out the chicken and egg problem because that is what we face everyday in decision making. Government policies are not prepared to assist start-ups until the start-ups have reached maturity, but start-ups need the help to begin with more than at a later stage.

VCs won’t fund you until they see traction (and who can blame them after the really low returns over the last few years?),

but you will not see traction until you have spent the money. Good employees won’t join until you pay them higher than the market and compensate them for the risk they are taking, yet you will always need the best employees out there if you are to rethink existing paradigms. Customers won’t buy from you until they see other customers they can believe in, yet you will never be able to start off that way.

This is where the advice I got from my favourite Commodore comes in the picture. When you are stuck up a shit creek without a paddle, you have to do whatever it takes to get out. It is time for action, getting your hands dirty, focussing on existing resources and forgetting the rest of the world. We get myriad advice when we start-up.

VCs want to see you “fully invested”

Basically, they want you to invest your money and be full time involved. They are right as we have no right to gamble with their money. However, there is no need to give up a well-paying job to start off without saving some money in the bank. After all, no one will fund you on day "0" and you will need funds to survive. There are some major companies out there which were started off part time. While you might be worried about monetising your project, no one will pay unless they see some proof of concept or traction. Do not worry about what the competition is doing to begin with. They have been there longer and have existing traction. Give it away for free to begin with. Anyone who says that you cannot raise your rates later is not entirely correct. You can raise your fees and monetise the product by realigning expectations once you have traction and by positioning yourself properly with respect to your customers. Start off by hiring smart and dedicated freshers and train them well. The senior employees that you need, will join the team when the time is right.

Basically, the summary is to survive and find ways around the chicken and egg problem when you start off. All good entrepreneurs know this stage well. At Eunimart, when we onboard customers for cross border ecommerce we explain to them before they join that it is not easy to succeed in international markets. It takes research, strategizing, identification of products and processes and, most importantly, patience and ability to discount your offering. While you are probably better than the majority of the products out there, it still needs time to create a difference and increase the cost of switching from your brand. Think carefully, which markets, which channels, how low can you go in terms of pricing, how to differentiate yourself, get reviews and quickly climb the ratings. It is not necessarily the lowest price, the fastest logistics which will win you the buy box. Eunimart is ready to support you on the best-selling channels globally, offer you the knowledge, data and the automated tools you might need. At the end of the day, you have to use them to become a top seller. Cross border ecommerce is a $ 370 Bn market and India does less than 0.8% of this market. It is high time we recognised the massive opportunity that lies out there, plucked our courage and gave it our best shot. 

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