My Learning with the Statup Mentoring

TOP 10 CONSIDERATIONS FOR STARTUPS IN STAGE 1

By Vipul mathur

Being part of an Startup journey is very enriching. It certainly makes one richer, sometimes financially and lots of time experientially. I am later.

As a founder member and CXO of abof.com, a part successful entrepreneur and now a mentor to startups, I had interesting learnings pertaining to Startups and the stages they go through in their lifecycle.

Having  lead large and  mid sized organization as CXO/ CEO, I also deeply appreciate the difference in the levers which brings success in startups, mid-sized and large organizational systems.

Despite only one of the ten startups succeeding, still the most common conversation over coffee or beer in Bangalore is building and nurturing dreams called startups.

I wonder. Is it the thrill of creating something which would make world a better place tomorrow, or it’s a lure of large moneys which follows? Is it the entrepreneurial creativity which wants to express itself before the age catches up or the confidence of putting the earned skillset to the test in the mid age ? Whatever it is, it the hottest topic in Coffeeshops and now in Boardrooms.

India has 3.6 lac registered startups. Of which only 8% are registered with DIIT. Which is also the proportion which succeed.

Large Conglomerates are incubating the startups in lieu of their research or innovation departments. As the speed and output of startups at far lower resources is unmatched. As it’s fueled by passion more than money or appraisals. There are now structured way to invite, nurture, harness and reward the startups working for conglomerates. P&G Global marketing officer Jim stengel’s book – Unleashing the Innovators establishes the Fortune 500 companies reigniting their entrepreneurial DNA through           startup incubation.

Any organization goes through broadly 3 main stages.

Startup phase 1 . Seed or angel funded. Experimentation phase. Trying to experiment with a good business idea before its known as one. Largely operate in 10-20 cr of revenue.

Startup phase 2. Venture capitalist / strategic investor funded. Rapid Expansion phase. Valuation focused. Creating larger teams and acquiring market. Largely between 20-100 cr of revenue.

Startup phase 3. Seed B/C funding. Meaningful expansion. Profit focused. Long term capability building. Largely between 100-500 cr of revenue.

Each of the phases goes through their woes.

Lets look at the 10 most critical things which Stage 1 startups should consider.

• 1.       Right partner
• 2.       Right need and solution
• 3.       Start Mentorship from Day one
• 4.       Long term
• 5.       Clarity of idea and thought
• 6.       Road map and focus
• 7.       Faster to market
• 8.       Right team
• 9.       Establish your expertise.
• 10.   Networking

Right Partner.

This is first yet most critical and important step. It’s like Marriage. Choosing the co-founder who thinks alike. Is equally passionate about the solution and the possibilities. Someone who compliments you. And is willing to go through the roller coaster ride. Understands that the outcome in couple of years could be anything, but the learning and joy on the ride would be worth the time and effort.

If there is doubt about the longevity of partnership, might as well take calls right upfront.

Right need and Solution

There is risk of getting trapped in confirmation Bias. Where One looks at evidences to confirm an existing belief. This may lead to wrong estimation of the real need. And hence the size of the opportunity. In one of my mentoring, I invited the Promotors to run a low cost, written survey to ascertain the pain which people feel in absence of the product, and how much are they willing to pay more to get the offered services. Results were disturbing, and lead to the strategy shift right at the initial stage.

Mentorship from Day one

Most of the startups are fueled with idea, energy and hope. But seldom with the experience and

networking. This is one of the easiest and most recommended tip. Get mentor(s) ! There is no time or resources to commit the same mistakes which somebody else has done. Identify the right mentor. And be open to listen to the critique. This can make the journey a fairly straight path with lesser convulsions. Mentors have innate capability to bring to light the perspectives which are not visible to promotors. And can prevents potential losses.

Long term

Creating a successful enterprise, usually turns out to be longer than expected. I heard a promotor saying this to me… “first 3 years were very difficult, next 3 were difficult…..”. Account for 5-8 years for business to be in place where it can self-propel. It’s certainly a long term game, and real results starts to appear normally after 3 years. There are no shortcuts to any place worth going! My recommendation would be to create a realistic road map and then add 50% more time and money to the same, with no logic. It may turn out to be closer to the reality.

Clarity of Idea and thought

Almost always, Investors give much more weightage to the clarity of idea, rather than quality of idea. Clear idea can be executed easily and hence executed well. My invitation to the startups has been to use mentors as the sounding boards to distill the idea, and make it short and clear.

Morris chang mentioned that Without strategy execution is aimless and without execution strategy is useless. Idea is only a starting point, execution is what shows the light of the day.

Road map and Focus

Road is likely to be full of bumps and lures. When a new opportunity emerges, it would be interesting for promotors to ask a question. Why I started, what I started ? Can I handle more than one opportunity ?

In my experience startups are bunch of enthusiastic people, hopeful and confident people, and runs a huge risk of over estimating one’s band width and underestimate the real challenges of market. Best is to make one success much larger, by focusing on the agreed roadmap. A good question to ask would be “Am I country’s or world’s best in what I do”. If not, there is lots yet to be done.

Faster to Market

Competition is always catching up and times are changing much too fast. There is much merit in getting to market as fast as possible. Testing the hypothesis. Learning and making amendments and then going again with a Bang. And get to scale and mind of stakeholders before competition responds.

Right Team

Organisations can run as fast as its people. This is often ignored. And needs significant investment of time and money to get and hold onto right people. Check if team is willing to learn and enthused about the possibilities. Teams at inception should have mindset of entrepreneur rather than employee.

Establish your expertise

Promotors should establish their expertise with investors. Without being shy. It’s their responsibility, duty and prerogative which should be fully exploited.

Networking

Most of the startups do not succeed because they run out of money 

or they get limited on

their expansion. And for both, networking is immensely helpful. Networking takes persistence and patience. And promotors should build this up as an important activity in their calendar. Sometimes Mentors or so called board of directors can he helpful through their connect.

The life changes as the organization starts to become larger. The challenges and insights are different. I would elaborate on them in my subsequent series.