Read this article if you know me, and are intrigued about what happened to the venture, or if you are in an entrepreneur-in-the-making, as you can perhaps avoid these pitfalls, or if you are an intrapreneur, as the thoughts may easily resonate with you as well. Yes, that’s right, I am talking about the startup that I co-founded! The ultra-innovative, ahead-of-the-times startup that wow-ed world-renowned brands, engaged with hundreds of businesses creating over 20,000 campaigns, grew organically with a distributed model, and came close to two acquisitions/mergers – had to close shop this summer. It is easy to externalize this ‘failure’ to the business environment in the world, but that would be an excuse. Granted that we may have survived on an upswing, but learning from the reality seemed more valuable, and I am hoping will agree.
We started out with the mind in the right space. And the following thought comes to mind!
“You cannot cross the sea merely by standing and staring at the water” Rabindranath Tagore
Well, we didn’t stand by. If I were to liken the journey to sailboats at sea, I sailed into the ocean without the ‘fear of failure’, instead, with great confidence having overseen dramatic success in innovation, albeit at a corporate.
I can say now the journeys are not that different, nevertheless, I had endured the real-life training, understood newer variables, and did not make the rookie mistakes, such as burning-out-cash-fast, expand-too-fast, go-after-investors-rather-than-customers, go-after-the-money and others.
Then, what went wrong?
On the outside, all businesses essentially fail because they run out of cash, of course. The reasons are always more intricate, and here is my world view of it.
1) Value creation cannot be an excuse for not making money!
Put simply – we didn’t make money because we didn’t focus on that. We believed in going after the big fruit – long-term value creation over short-term money generation. When a board member of a 1500CR company asked us “You beat big majors in evaluation, but how do I know you will exist next year?”, we addressed his concern with “Pay us next year!”. That’s how much we had invested in the long-term, but in hindsight, we should have known when to sail and when to stop/reap the benefits – very much like the stock market!
Learning: Starting out is an emotion, but once out there, apply the ‘Rule of 40’ consistently.
Rule of 40 in simple words is Profit Margin % + Revenue Growth % > 40%.
2) Expert Opinion cannot define Your heart’s heading
Ken Blanchard said “Feedback is the breakfast of champions” and I have always asserted my own growth in corporate was attributed to it. Take that too far, and while you are at sea, and a potential investor query such as “Hey, you have great tech, but I can make this work instantly in logistics, are you interested?” tingles your vulnerability immediately. Don’t get me wrong, that’s not bad advice, but if that’s not what you wanted to do, you build things that don’t help your cause.
Learning: Don’t ask your advisors which puzzle to solve (heart’s heading), but treat their experience as a valuable piece of the puzzle you are solving!
To emphasize, surround yourself with advisors and who have sailed before, but know how to leverage experience and advice!
3) Features cannot substitute for NOT diversifying your market
Market surveys certify a product-market fit, but that’s not where you stop evaluating. When a prospective buyer sees an AI-demo predicting consumer intent at a physical shop accurately and he says – “Wow, that’s cool, can you also give me that POS (point of sale) data?”, he classified your AI as Desirable and POS as Mandatory. You have a choice – build the POS extractor to bag a brand name or find customers/markets who would buy the AI. What would you do?
Learning: Rigorously find the ROI on every feature, it’s easy to be enamored by a renowned brand logo on your portfolio.
Understand ‘Feature ROI’, ‘Customer Lifetime Value (CLV)’, and ‘Cost to Service’ a deal. When at sea, it is easy to make short-term decisions, but survival depends on well-judged long-term decisions.
4) Building an infrastructure business yourself, is at best, fragile!
Market places are heavily funded in India, infrastructure businesses not so much. So, you decide to sail anyway, not willing to trust potential investors who are just getting their feet wet or not knowing how to get the attention of the well-traveled! However, sailing out into a deeper ocean without support was just pure adventurism and when the storm (the year 2020) came, the fragility was exposed. Well, you can’t blame the storm when you went there knowing the risks!
Learning: Align your dream with the reality of the environment around you. Relocate, if you need to, as dreams are not realized sitting around.
Relocating is not always a good thing, but its worth a conscious consideration.
5) Building a business requires inner motivation
Sailing out into the unknown requires a different mindset, a passion. There is no dearth of external motivation when you set sail. Once in the open ocean, its lonely, you see another boat once in a while and to go on endlessly requires deep inner motivation, passion, and most importantly, alignment to a purpose. This is the only perennial battery source in this long journey, so next time I won’t ignore the dissonance I felt when we changed direction in pursuit of being financially successful. Watch out for that!
Learning: Inner motivation comes from being aligned to a purpose and not the pursuit of money.
This is not new learning, but worth an emphasis – pursue innovation because of a greater emotional purpose that is dear to you, as there are better ways to earn money with greater determinism, if that is the goal.
Fear can drive success and failure
Well, that’s that! Perhaps the top 5 learnings from this sailing. I think you will agree with me that innovation inherently deals with ‘unknown’ factors and its only but natural to have fears when you set sail. It follows that understanding, embracing, and dealing with them leads to dramatically better results and even powers success.
Let me make an assertion and we can debate it. I feel that innovators face ‘fear of failure’, ‘fear of change’, and ‘fear of success’ each coming at different stages of success before you reach the finish line. Of course, this varies by personality type, intensity, quantum, and person to person. Fear is known to cause distortions to decisions, but it’s not often you want to analyze that, as its more tangible to discuss an actionable ‘external’ event.
I wanted to try and get deeper and analyze, to put myself out there, so we have a real situation to discuss. I invite your perspectives. In my case, if you look closely – not diversifying markets, stayed self-funded in a price-sensitive market, susceptible to directional advice – all point to one emotion:
“Fear of change”
Things were working reasonably well, why not just build the POS extractor and get that super brand? Well, you reached this stage of success with a lot of hardship, it is fragile, there is a worry that changing dramatic can break it, but that’s the whole illusion!
I was lucky to reach the flag in my first outing and blind-sided at sea the second time. I wish I had disassociated and seen it this way earlier. Perhaps I am simplifying the decision making more than I should, but I would like to leave you with the thought that, each one of us can greatly enhance outcomes by understanding, embracing, and dealing with fears that influence them. Do you agree?
Your perspective is most valued. I’d be happy to hear your feedback, advice, or criticism. Thank you for your time, reading, and your support.
Author : Krishna Mitter
Post Graduate from IISc, Leadership at Harvard, 24 years of industry experience, grew and led ~200 sized engineering teams, built high volume AWS Cloud based SaaS enterprise AdTech offering and currently working on a intelligent service automation platform.