What Tech-Enabled Startups Should Do to Grow in a Turbulent Economy

At the PCQuest Growth Forum held in Delhi on 15th June, 2016, experts from the startup ecosystem discussed key strategies, provided advice on the pitfalls to avoid and chalked out an overall roadmap to follow for tech-enabled startups

At the recently concluded The Growth Forum 2016 discussions on the start-up ecosystem in India were central to all sessions. Indian start-ups have received support by the government and the policy has been very start-up friendly. This initiative is going to nurture the entrepreneurial ecosystem to create more start-ups as well as opportunities for its vast young population to find employment.

In the 90s many young people moved to the US and Europe as IT professionals and as a result most notable CEOs are now armed with a foreign university degree. India has gained a lot of experience and expertise and its capacity to deliver high quality technology products and services has grown manifold. The current generation of founder CEOs have a great exposure to innovative technologies as many have worked with major multi-national corporations. The growth strategy of the Indian start-ups largely rests on their ability to tackle the challenges to scale their business and also to manage other co-founders. Speaking at the conference, Pradeep Gupta, CMD, CyberMedia said that egos of founders often brings a company down.

“In the initial phases you need to secure a business and make changes in strategy, but those who don’t make changes in strategy do not succeed. Look at Snapdeal, within five years there were three flips that happened in their strategy, but the ability to make changes should remain a key strategy,” he added.

Why Start-ups fail

Many series A or angel funded companies are having a tough time this year and survival rate is very low. Only 15-20 per cent companies survive with time. Saurabh Srivastava, Padma Shri awardee and an Angel Investor said, “My advice to all the start-ups is that don’t sit in your office. To build the best product in the world engaging with the market is a must. The reason why start-ups fail or don’t get far is because they don’t have a long term strategy. To grow you need to have capacity to grow, need skills, and need to go to the depth and breadth of your resources. Microsoft has never been known to give better products but is still successful because of good sales and marketing. So how do you take tech products forward, how do you market it, how you leverage tech is all that really matters.”

Is there a market for your product?

If you are passionate about an idea then don’t just leave it for the lack of funding. A great idea can only be realized if it is communicated properly to the team or VCs. Speaking on marketing strategies, Gupta said that the market is the first real test of the idea. VCs shall ask whether you have tested your idea with anyone, and what’s the feedback you’ve received on it. Ola cab founder came to Naukri.com for funds but they refused. Now surely they would be lamenting over this decision as Ola is huge now and continues to grow.

Making the most of the Kodak Moments

Kodak was at the top of the game but then it lost the plot and finally disappeared. If you are not listening to customers it is always a challenge to run your business. Staying still or growing slowly is not an option, in a competitive market. Unless it makes economic sense, more growth means more problems. If your market strategy is good and unit economics is good, you will catch up and be profitable in future. Start-ups need to find a reasonable model and then look towards scaling up. Profitability is like gravity, you may run away but ultimately it will bring you down to earth.

“Companies with the best products win is true but at times even the best products fail because of poor collaboration amongst founders, their own cussedness, and bad strategy. Indiabulls has been successful because the founders were very smart, had a good strategy in place and they have grown over the years,” said Srivastava.

The Genesis of a Start-up Culture

It traces its roots to Darwinian theory and is a continuous progression across generations. Teenagers are rebellious so they don’t conform to their parents and create a new generation altogether. This rebellion is critical to evolution of human society as well. “Start-ups of today are teenagers of corporate world, and they are disrupting the whole industry, challenging the conventional thoughts, and bringing in innovation,” said Sandeep Majumdar, Chief of Operations-North, Sify Technologies.

The current generation is always on the move and connectivity for them is as essential to them as roti, kapda aur makaan.

Most start-ups want to be very transparent with their customers. Many companies want to share notifications with their customers and be visible in their supply chains. So if you don’t provide transparency, the brand suffers.

Today’s millennial generation is very different from pervious generations. People who belong to the selfie generation are obsessed unabashedly about themselves. It’s a good business strategy for brands if they sell products more through customer engagement and personalization. Previously, split personality was a psychological problem but not today. Today people have two personalities. Individual personality and a digital personality are very different. Always ensure that your products cater to this split personality.

The Streisand Effect

This refers to the phenomenon where an attempt to hide, remove or censor a piece of information has the unintended consequence of publicising the information more widely, usually facilitated by the internet. The recent trolling of Rana Ayub and Barkha Dutt on Amazon and social media over their books on politically sensitive issues only ended up giving them free publicity. Social media has replaced the idiot box and now tweets and posts are the new talk of the town.

“Twitter, influencer marketing, presentations online, digital brochures, etc have made social media marketing the next big thing. It just takes few seconds for an idea to go viral. To engage the reader marketers are trying out new things.,” said Prasanto K Roy, Technology Evangelist.

To Conclude…

This Indian summer has been hard on the Indian start-ups. They are chasing anything but profit. Talk to them about profits and they start talking in terms of GMVs, future growth etc. The money spent by even unicorn start-ups on customer acquisition is absurd and this is obviously not turning into profits for them. Identifying the target audience is the key. Also, many start-ups don’t have a fixed growth plan. One fine day, they want to capture the whole country and after a couple of months they end up scaling down operations after burning millions trying to scale up.

The start-up ecosystem in India has been through many ups and downs but replicative business is a serious concern. It feels that “founders” jumped on the start-up bandwagon just because everyone was doing it. Apply due diligence before jumping on the bandwagon!