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Is funding the most important ingredient for your startup?

What if Facebook acquired Twitter? What if Yahoo acquired Google? Its more than just money.

Wednesday June 22, 2016,

5 min Read

Before I start, let me tell you two true stories that could have entirely changed the way the world works today!

It was summer 2002, Google and Yahoo were already huge competitors in the Internet industry. Though Yahoo had a more prominent global presence with a bigger market share, Google still existed, growing at a rapid pace.

Google at that time needed some cash infusion. It approached Yahoo for a buyout. Yahoo was ready to buy Google for $3 billion. But Google believed that it was worth more than that and quoted a price of $5 billion. Yahoo rejected to buy Google at that price! (Yes, you heard me right! Rejected!)

Recently Google’s parent company Alphabet overtook Apple to become the World’s most valuable company at a market valuation of $530 billion (Approximately!).

Today Yahoo’s rejection to buy Google is termed as one of the biggest Tech acquisition mistakes in history! http://www.wired.com/2007/02/yahoo-3/

Imagine the world without Google Search, Google Maps, YouTube or Gmail. It could all have been Yahoo’s products if not for that ‘ONE’ decision.

It was late October 2008, Twitter Co-founder Evan Williams came in his Porsche to pick up Biz Stone, his co-founder for a drive. Little did he know, that Evan was driving him to Facebook Headquarters, Menlo Park on a special invitation from Mark Zuckerberg. On his way, when Evan mentioned about the invitation from Mark, not only was he surprised, but he was also sure about the reason why they were being invited. In a brief span of time they decided NOT to reject the ‘offer’ made by Mark directly, but rather quote a price which they assumed, would not be willing to pay to ‘acquire’ Twitter. (They said let’s quote the biggest number that comes to our head!)

Now after they were given a tour around the Facebook HQ and Mark made an offer to acquire Twitter (as expected), Jack and Biz as decided, quoted $500 million. (In 2008, it was a huge sum) To their complete shock, in return Mark said I’ll pay you $1 billion (Now that was unexpected). The deal finally didn’t happen.

Twitter rejected an offer by Facebook for a buyout of $1 billion!

Today, Twitter has a market cap of $12 billion. Imagine what would have happened if Facebook would have acquired Twitter! Later Facebook bought Instagram for $1 billion. https://techcrunch.com/2013/11/04/the-three-reasons-twitter-didnt-sell-to-facebook/

Imagine staying without Facebook or Google for a day. In today’s world technology is something which has become a way of life.

Needless to say, money is a very important factor which can determine whether a startup will succeed or not, but the main aim should be to ‘build’ a product which is loved by all, which solves a problem and empowers people.

$9 Billion has been pumped into the Indian startup ecosystem in the year 2015 alone (yes, you heard that right!). With the ‘STARTUP INDIA STANDUP INDIA’ campaign by Prime Minister Narendra Modi and shows like ‘TVF Pitchers’, India’s startup revolution started. It got people to think about entrepreneurship as a career. It became a ‘cool’ buzzword among the youth. http://yourstory.com/2015/12/indian-startups-raise-9billion-2015/

With money floating in the ecosystem and presence of global VC’s like Softbank and Tiger Global, the involvement and initiatives by entrepreneurs became more and more significant. But there is something BIG which is missing?

And that is focusing on the PRODUCT rather than the FUNDING part.

Money will follow eventually if focus is entirely on the product. Entrepreneurship is all about making dreams a reality! It’s about solving a problem that ‘exists’.

Most Important things which passionate entrepreneurs need to FOCUS are:

- Product 

Innovation is the key. Constant evolution of the product.

- Team

A strong team is one of the most important factors which can decide whether the startup fail or succeed.

- Traction

Focus on consistency and having a growing set of customer base.

- Revenue 

Until a startup does not make money it is still a hobby, once it starts generating money it becomes a business.

Focusing on these 4 building blocks can be take a startup to great heights.

When WhatsApp was founded by ex-yahoo employees in February 2009 after being rejected on a job offer by Facebook, little did they know that they would be acquired by Facebook for a whopping $19.3 billion, making it one of the biggest tech acquisitions in history. The same thing recently happened with LinkedIn as well, which was acquired by Microsoft for a staggering $26.2 billion.

At that time the only thing they concentrated on was improving the product day by day, acquiring more and more customers (Scaling Up!) and becoming profitable.

There will be a lot many difficulties entrepreneurs face, risks, unpredictability, bankruptcy, customer un-satisfaction etc but without all these challenges, where’s the fun right.

As the saying goes ‘After every dark tunnel there is light!’ in a similar way every entrepreneur will face difficulties initially but in the end there would be success.

“I can’t change the direction of the wind, but I can definitely adjust my sails to reach my destination”.