What is a cockroach startup and how can you become one
Startups are now trying to go the Cockroach way.
After going lean for three years, it’s a delight that now it has finally become recognisable.
So, what is a cockroach startup?
2016 is going to be a tough year for startups as investments are drying up in the market and investors are becoming aware and are trying to keep the money in their pockets for a while. They are describing it as a time to switch from burn-burn-burn to lean-lean-lean.
A cockroach startup is the one which keeps struggling, going forward in spite of changing environments, market conditions and investment scenarios, just like a cockroach. They are the ones which are capable enough of knowing where they should spend money and where they shouldn’t.
How can you become a cockroach startup?
After building a digital marketing firm (Viralcurry) straight out of college with negligible capital (myquora post on this), making it profitable, being my own boss and winning an award for it, I think I might be able to give you some tips on how to go lean:
Do not try to attract employees just by offering a higher salary, ACTUALLY sell your vision and enthusiasm
Even though we had the chance of hiring some of the best talent, we never tried to attract them by offering a higher salary.
We actually sold them our vision. We always told them that they will learn a lot if they work here. We told them point blank that we have no glass building office or a big pay packet to offer but you would really learn from us. We told our struggle story to all these aspirants.
We automatically filtered out the ones who were here for just the money, and we always got those who consider it their own company. These employees, in turn, will sell the vision to the next set of employees and that’s how a great team will be built.
Note: There is a very thin line between offering an optimum salary by selling your vision AND exploiting talented people by paying much lesser than what they deserve by falsely convincing them.
Avoid spending on fixed assets as much as you can
Early on, we made a rule that anyone who gets hired will have bring their own laptop to office. It helped us save a lot of money. For example, if there are 20 employees, you will have to spend around Rs 7,00,000 to buy laptops for everyone. And then you will have to replace it at least every two years based on the usage. Thus, you will end up spending approximately Rs 3,00,000 per year on laptops!
Instead, you could hire a team member with that amount (or a little extra) who will be a real asset to the company!
Spend on good internet and hosting servers
We took the leap from services to product this year. While bootstrapping through it, we hired a great team, but somewhere started trying to save money on servers. Soon after that when unexpected traffic flew in, we realised that it is important to buy the best Internet and hosting services.
A bad server could kill everything that you have acquired till now.
Our server once crashed on a weekend, in less than an hour negative reviews started trickling in on the Google Play store listing of the app. We lost the money we had spent on getting those precious downloads and building that reputation!
Always live below your means
This is more of a founders’ personal life matter but seriously, live below your means. Stay humble and grounded. Even if you are taking home a salary from your startup, SAVE!
This is how I saved from my digital marketing firm and then spent it on building a co-working space. The co-working space has given me another source of income, motivation, and networking! I don’t think an SUV would have given that to me.
Keep the product/service as the centre point not the funds
The importance of providing value can never be ignored. Great startups have been providing value at the core of their being. If the centre point of your startup is providing the best services/building a product that people would love to use, you are a perfect cockroach startup!
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)