Sunday, July 26, 2015

Theme, Thread or Passion: What drives Successful Startup Companies?

The startup phenomenon, it appears, is gathering pace in India. Startup, in fact, is emerging as a concept different from entrepreneurial business. Entrepreneurship, as we know, has been in existence for as long as the history of business. Trade or service, design or manufacturing, and sales or marketing, entrepreneurship has been the foundation of today’s successful corporations. Entrepreneurship has been synonymous with spotting business opportunities and building a delivery infrastructure for them. Typically, an entrepreneur focuses on building a big business that can continue to thrive. All entrepreneurship is not about innovation or being first time to market. It is also about doing things better than others, and excelling in both well-trodden paths and in uncharted territories.

A startup, on the other hand, is fired by an entirely different consideration. He or she seeks to convert his or her product or service idea into a technically feasible and commercially viable practical proposition. A startup founder does not typically start off with the objective of setting up and growing a business to a certain scale and scope; his or her interest is solely on product development and proof of concept (POC). In fact, POC is the key milestone, and in some cases, even the final milestone for some startup founders. The latter class of startup founders would even consider selling away of their startup companies immediately after POC as a perfectly legitimate goal. That said, risk taking and attempting something far beyond one’s resources permit is a common factor between a startup founder and an entrepreneurial founder.   

Thematic matrix

Startups are usually based on matrixes of certain core themes. Uber was started on a matrix of cabs and aggregation, Paperboat on a matrix of contemporary packaging and traditional Indian beverages, Lunch Box on a matrix of nutrition and delivery,  TravelTriangle on a matrix of value addition and customization, Knowlarity on a matrix of voice application and cloud hosting, Bluegape on a matrix of customer idea and digital printing, Reportbee on a matrix of data analytics and performance mentoring, Grey Orange on a matrix of robotics and warehousing, Paytm on a matrix of customer loyalty and monetization, Zomato on a matrix of search and review, and so on. There are two aspects, however; almost all modern startups are powered by software and Internet. As with all industrial activity, one thematic start-up prompts several follow-ons.

Not all startups may have a unique thematic matrix but all do have a thematic matrix, for sure. Successful start-ups use thematic matrix to look at established products or services differently. Uber applied thematic matrix for something as simple as cab services while Knowlarity applied thematic matrix for modern information technology solutions. That’s where startups score over classic entrepreneurial companies which typically look at product-market spaces. Startups do not look at available product-market space for entry; rather they look at redefining or recreating the space. The intersection of the two dimensions of the thematic matrix leads to redefinition as is the case with Paperboat or Lunch Box. Certain dimensions of thematic matrixes are more universally applicable than others; for example, aggregation and analytics. So is the power of Internet and software.

Common thread

Every individual may have skills but only a few have ideas that could utilize their skills. Even fewer have clarity as to how their ideas and skills could be dovetailed to create a product or service, and eventually a business. Those who possess the common thread of skill, idea and clarity tend to be better placed as startup founders. There is yet another set of education, experience and experimentation forming another common thread. Typically, startups are co-founded as multiple common threads are needed to make the product or service idea work, from design to delivery. The introspective ability to identify and the intuitive ability to feel the common threads is an important component of startup development.

Given that the actual universe having the skills, ideas and education, experience is large, the key to expanding and enhancing the startup ecosystem is the ability to develop as many common threads as possible. The startup system is full of examples that reflect startup founders discovering their common threads in successive iterations. What starts as a supply of nutritious food for school children can evolve into supply of nutrious food to elderly and later to all age groups. Experience in aerospace and experience in food may combine to establish a startup that delivers food through proprietary drones. At times, common thread need not be only between the founders or employees of a startup. As Reportbee illustrates, teacher-student connectivity forms a common thread through what may be viewed as evaluation. Thematic matrix and common thread constitute the core of a startup.

Uncommon passion

Passion is an often misused word. Increasingly, it is being reflected to categorize individuals as leaders and followers, entrepreneurs and professionals, and so on. Passion is actually more universal. A doctor who works the most hours to save lives is a passionate doctor. A doctor who speaks up for patient rights and clinical integrity is also a passionate doctor. So is the case with an engineer who toils to complete his design project and the one who swears by quality of design than mere timelines. In all these instances, the individuals are sacrificing something, be it family life or lucrative career. Passion, to be distinguished from hard work and diligence, faces its litmus test when it has to face the test of sacrifice. From freedom fighters to entrepreneurial icons, passionate people would typically have had periods of sacrifice. The same is the case with startup founders who invest most, if not all, of their savings (sacrificing regular employment) in their ventures.  

Co-founded startups rank high not only on thematic matrix and common thread but also on passion. Unlike the first two, passion is an emotional attribute influenced by both intrinsic personality and extrinsic social factors. Presence of a co-founder who can compensate for or reinforce the passion quotient certainly helps in creating successful startups. At the same time, founder exits or leader churn in startups the moment they become successful is indicative of dilution of passion quotient and entry of familiar organizational dynamics of big corporations. It is important that founders of startups view passion as more than effort to successfully deliver their idea into POC but bind the organization into a hub of passion, where each supports the other, and in the overall achieves a fair work-life balance. Thematic matrix, common thread and uncommon passion (TTP) integrate as the basic motive force of startup success.

Idea banking, Crowd funding

For a thriving startup ecosystem, a proliferation of ideas is critical. It is heartening that graduates of premier institutes are increasingly ideating during their final years and are prepared to forsake lucrative careers to pursue their ideas. Some others are shifting gears from regular employment to startup ecosystem. Educational institutions should make idea cells as important as placement cells. Corporations should also be willing to give sabbatical to their executives to pursue their startup ideas. Luminaries should mentor startup projects even when they are in active service and are able to provide positive influence. They can pick up niches from the value chains of their businesses which can be reinforced with startup ideas.

A review of India’s successful startups show that with investments ranging from a few thousands of rupees to a few lakhs of rupees, several startups have succeded. With angel investors and next stage investors adding their financial mite in the second and third stages, startups blossom as full-fledged corporations. The most difficult stage is the first stage. There are more TTP platforms waiting to become startups than have actually become. A liberal crowdfunding investment environment could make a significant difference to India’s start-up scenario. Crowdfunding enables more differentiated startups to come into being as organized financing typically tends to focus on successful domains. It is also important for consultants to retool their consulting templates to chisel startup proposals in a manner that attracts investment.  
Posted by Dr CB Rao on July 26, 2015    


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