Absolutely sad to see the state of the startups, most of them. I am a founder myself, and this is a post with equal disappointment with myself as much as it is for anyone else who relates. Look at all these companies that have raised shit tons of capital, and now make a fraction of money that has been invested in them. The raised money is spent on outsized, non business sense making acquisition costs, only to keep repeating it till the tap runs dry. Then when all stakeholders get bored, the service quality plummets, the employees are fired and whole sectors are admonished as being bad.
But, my question is, which sector where large sums of money was invested in early days have come out with flying colours. Fucking nothing ! Edtech, proptech, agritech, ecommerce etc. etc. etc. kuch bhi nahi.
Is there any sector where a startup which has raised in the 100s of millions in the first 5 years have actually built a sustainable business at any scale ? Then scaling down, isse acha, scale slowly. The worst part of this whole drama, is pushing the innovation wheel backward and destroying customer sentiment.
Isse acha, raise less money inititally, build slowly, and only scale when the market is ready. Artifical growth makes no sense, unless you have a treasure chest that shall never run out. Even in that case, spend the money on assets and not on random acquisition costs, direct or indirect.
As founders, let's do better, nahi ?
Our company spent 1 cr on a marketing agency zero results to show pathetic
are u a founder of the company or an employee ? did u authorise it or just sad that someone did and it was horrible ?
I was the head of engineering I knew all this because the cpfounder who hired this agency vanished and I pretty close to the founder themselves
What space do you have your startup in? And what would you suggest are things to look out for before joining a startup? Looking out for one.
We shut down a few months ago. It was in edtech. Shut it down for reasons more concerning than just the business.
I would suggest you speak to founders and try and asses their clarity, of how they want to build it, how earnest is the intention, long term vs short term mindset, truly. Not easy to guess. Also, depends on your motivations. if your motivation is a quick bump in the next 2-3 years, and decently funded startup, doing decent work, you can learn more in 2 years than anywhere else. Even super early stage with less money but clear direction, can lead you much ahead in 18 months than many other opportunities. So a mixed bag !
Got it. Thanks!
If you are talking about naming one sector, my bet is on B2B e-commerce. Look at the annual results of Of business. 15000+ cr topline and profit of 400 cr. Overall, taking Indian SMEs global is a great market to be in due to China+1 narrative.
Other promising startups in this space: Zetwerk, Fashinza and many other in early stages.
That is 1 percent of the revenue. Not to be celebrate at a grand level. Please have a close look on the balance sheet on MCA. You will understand the game.
i was reading the same about ofbusiness yesterday and was super inspired and was calculating that i have a long term view. But will my next idea have as much potential. Was also wodnering what to focus on, topline or profits. there could be ways to make similar profits at lower GMV's also.
---Opinion---
Founders think that funding is a stage/achievement, basing that their startup has reached a certain stage. It's not. Funding is a means to reach that stage. The founders of FrontRow and their blogpost is a case study founders looking to raise should read. More money, more problems. More funding does not mean less problems. Founders need to realise this. Using the least amount of capital to maximise revenue and profits should be the goal.
On the other hand, investors with no experience in building companies are working with operators. There's a big disconnect. Investors are great financial planners and marketers. They can raise capital from LPs, conduct financial litmus tests to figure out which startups to invest in. But not a lot of these investors have worked as operators. They might know how to run companies and startups because they've worked with their portfolio companies, but startups in general are disrupting new problems and existing industries. Their advice means shit if they haven't been entrepreneurs themselves. That's why I admire YC, Peter Thiel's fund, because they're run by people who have operated as founders. Investors in India specifically have a "boss" relationship with founders rather than "advisors".
Also, in the Indian startup ecosystem, we are not allowed to fail. Investors may invest to save a failing startup. There's this fear of failing, which i strongly believe should change. Companies and founders, in Silicon Valley especially, pivot, crash and burn, and still end up looking out for new problems to solve for. Investors are willing to burn money because of the 80-20 rule. Failure in India is seen as a setback and not as a stepping stone towards the next big thing.
Agree with almost everything that you have said.
Most investors that work with founders in India have done jack shit in terms of operations. They have no clue. I have had board meetings where they would say things like, AOV badha dete hain, problem solved. LOOOL.
However, i don't think failure is a taboo !
It's not a taboo (and I didn't say that). Failure is "not allowed" in India. Founders and investors would rather keep on stretching the inevitable than just shutting shop asap and moving on.
Either pivot or shut shop + move on to the next problem statement without using more capital or fundraising to fight the fire.
Listen to Masters of Scale by Reid Hoffman, and you'd understand the meaning behind this!
Its true for all new businesses that some would thrive, some would find it hard to make ends meet and some would just crash and die. All businesses are someone's investments and they suffer one of the 3 fates mentioned.
Indian middle class hardly worked for new businesses before Indian startups came about as they chose MNCs for last few decades. So, they mostly saw boring well run businesses before these.
Now when they work in new companies, some of them well run, some of them absolute lost causes, they see very out of ordinary scene of failing businesses.
Its very common for a business to make stupid decisions and fail, it was just not common for us middle class oeople to work in them and thus we find it strange.
TL,DR : Some businesses do stupid stuff and fail, that's the way of nature. There's no way all businesses will be successful. We need to learn to live with it.
Hey, no, this i think we understand bro. The problem is misaligned incentives and hence tha lack of success we see around us. We can change that.
There is not a lack of success in startup world. Successes are boring startup businesses that are running smoothly and raise decent fundings once in a while. Not something that media wants to cover and investors want to invest billions of dollars in (so no 1 cr salaries being discussed here on grapevine). Basically a startup business must become boring with time (only then it focuses and grows), movies and news are made about outliers.
This is how VC backed startups work. Go big or shutdown early. The shit ton of money burnt is something VCs are okay with if there is a slight possibility of outsized returns.
VC's burning money, their problem. Founders losing their time, worth their weight in gold. Why not make your time more worth while. It's not abt the money only.
I am not a founder. Maybe we are giving too much credit to their time. And maybe it is sometimes about the money.
If only people were this wise.
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