Thirteen years ago, I was a normal kid from a small town who had absolutely no idea about the technology business, let alone technology startups. I caught the startup fever two or three years down the line, and I could never let go of my fascination. Ultimately, I started my own company.
Over the years, I have been invited to speak at several conferences at engineering and business schools across India, and I’ve met many young students who are equally attracted to the startup world. They have a lot of fire in their belly, and unbeatable adrenaline rush. But it hurts me to see that most of them do not realise what entrepreneurship is all about.
Recently, I met a couple of kids at the Indian Institute of Management (IIM), Ahmedabad, who absolutely worship Rahul Yadav, the CEO of Housing.com. But what they don’t realise is that people like Yadav have projected an incorrect image of entrepreneurship. It isn’t that glamorous or cool. Actually, in a country like India, it is a big pain in the ass.
From my experience, I could help clear some misconceptions people in India have about startups.
1. No one gives a shit about your idea
An idea means nothing. You need a working prototype, and customers should have validated your product. In fact, you need to show an ever-expanding customer/user base.
Most investors do not care about the idea because they know that when it comes to execution, nearly 90% of the people fail.
2. Find a co-founder ASAP
Jobs and Wozniak, Gates and Allen, Hewlett and Packard—all great entrepreneurial pairs who launched some of the most successful companies in the world.
I realised it pretty late but now I know that you just can’t have a startup without co-founder/s. That person can share your workload, can bounce off ideas with you—and, most importantly, correct you when you become a “know-it-all.”
3. Investors live on a different planet
Investors want to invest in companies that have shown outstanding growth. But, if you’ve shown outstanding growth, why would you need investors?
Almost every investor that I have met over the last nine months has given various answers from a straight “no” to “seems interesting but our ticket size is $1.5 million and a growth rate of 30%” to “I can invest $100,000 for 35% of your company.”
They also care a lot about which school you are from, and if you belong to the IIT (Indian Institute of Technology)/IIM/Stanford/Harvard/Wharton umbrella, then the equation is different.
The notion that investors would flock to an individual with an idea written over a tissue paper and write a cheque for a million dollars happens only with Elon Musk. So, get real and don’t waste your time looking for investors. If you have a great product, sooner or later they’ll appear out of nowhere.
4. Focus on growth, not valuation
A lot of startups start focusing on something called “valuation.” Let me say it once and for all—valuation is a useless component. It really doesn’t mean anything initially as you are a startup without any assets (real estate, intellectual property, and so on).
So, screw it and focus on exponential growth and how fast you can achieve it. Growth makes you cash-rich, and you can reinvest the money into making your services state-of-the-art and hiring awesome people.
5. It is a lonely journey
When you see your friends post pictures of a recent vacation they had in a plush resort in Spain, you might want to leave everything to have the same life. But these thoughts are natural, and your ambition will help you steer through such moments.
You need to spend lonely hours with your co-founder for the next five to 10 years of your life, creating an entity which may or may not survive. You might not have any social life at all during these early years.
6. Be humble
Yadav has become some sort of a hero these days among startup aspirants. But, trust me, that kind of arrogance is a recipe for disaster. Look at people like Jack Dorsey, Tracy Chou, Ruchi Sanghvi, Robin Lee, Aaron Levie, and Vivek Ranadive, who have made a name for themselves in Silicon Valley without any of the theatrics that Yadav indulges in.
If you are an entrepreneur, it is essential for you to be humble no matter how big your company is. You need the support of fellow entrepreneurs, investors and the rest of the startup community when it comes to running your business. Take a look at our Marwari community in India, where businessmen often help their colleagues, friends and peers in distress—because they know the favour would be returned when circumstances change.
7. There isn’t any finance guy initially
Take a short finance course. You need to understand stuff about valuation (pre and post), shares, unit economics, NPV, EBITDA, and so on. If you know these concepts, you’d be in a better position when you talk to investors.
8. Leverage the power of startup communities
Being a member of OCC/Headstart/TiE has amazing benefits. I have been reaching out to these groups for guidance with several issues, and surprisingly, every time I end up connecting with individuals who are more than happy to help. Long live the power of crowdsourcing!
9. Beware of false entities
If and when you wish to raise funds, you’d find people emailing you posing as investors or high-net-worth individuals. Do a comprehensive background check before you share any company-related data with them. AngelList is a good resource to find information about individuals who claim to be investors.
10. Fire fast
It is important to fire people who don’t fit in. If you have people who act as an obstacle towards achieving your goals, you might end up losing precious time.