Indian Start-up ecosystem … a feel good movie gone wrong!!

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What is a recipe of a feel good movie or a Karan Johar movie?

a.       Story line which could make you smile …

b.      Investment by a big production house…

c.       Lead actors making you smile…

d.      Lavish movie setup…

e.      Emotional drama…

f.        Happy movie Ending…

This is a typical recipe and we all have enjoyed such movies and walked out of the theatre most of the time smiling.

So our Indian start-up has figured out a similar recipe with a twist… The Twist is terrible ending …

 a.        Story line vs product idea…

Great idea, product ready to do wonders in the short term, fancy presentation, very good social marketing, founders seem to be grounded in the idea, ready to get their hands dirty, attachment to the product and great outreach to VC’s

b.      Funding / Investments…

Seed Funding, 1st round, 2nd Round – Investment in Millions $

c.       Founders & High profile executives…

Founders' work hard in a garage, 1 room, office and with co-founders who have the understanding to bring the product to a level where it enjoys success and with this success is able to get the required funding. Now during the Interval the same founders require high profile executives with fat pay checks and trying to get their attitude mixed with a startup ecosystem.

For a year these executives try their best to work with the grass root level ecosystem and getting the hands dirty concept, but unfortunately when someone has just come from a high profile brand with luxury and lifestyle it becomes difficult. Either they ruin the culture or exit as fast as possible. In the last 3 years, most high profile executives have walked out after a year / 2 in the startup making the Founders spend millions of $ in salaries and taking care of their mood swings. Dejavu just like a Lead actor….!!

d.      Lavish spent…  

Million $ funding, lavish lifestyle, luxurious infrastructure, great showmanship, marketing budgets sky rocketing, salaries spent sky rocketing, in the name of R&D money is spent. I am not able to understand when you have come up from a grass root level of working hard to get your start up successful is their really a need to spend ?

Some questions to Introspect:

1.       I understand when you grow, you have to expand, move to a new office, but does the spend needs to be so high and has to be so glamorous?

2.       When as a founding member you have taken the product to a success do you really need these B-schools, high paying executives to take the business from 1x to 5x?

3.       Do you have a formula that these executives will take your business to 5x?

4.       Moving to a 5-star facility has it helped you in increasing your revenue from 1x to 5x?

e.      Public Drama…

Once the story is set in with highs of success and funding begins the emotional drama primarily managing the public perception of handling the revenue going up, valuation and handling these high profile executives.

f.        Twist in the story…         

Since this is real world seldom we could have great endings with these startups. Once the emotional drama kicks with news of valuation and revenue dropping the twist in the tale begins with Sr. Executives moving away from a sinking ship and then stranded are the founders and the employees. It is never a happy ending either it is a buyout by a larger player or shut shop. Recent examples are many and we should now have one dedicated section for startups shutting shop.

It is very unfortunate that what started as a great idea and dream to reach greater heights has ended up with employees losing their job for no fault of theirs.

I hope the founders and VC’s become sensible in their approach and hire right people not get swayed by brands and B-school degree.

Bubbles just like in 2000s are now bursting fast...