Entrepreneurs should discard the fear of failure from the very outset. While a founder should give it his/her 100 per cent, one should bear in mind that failing is not the end of the world. 2016 will see the emergence of several tech startups as there are numerous real problems to solve. While the funding scenario may be challenging, differentiated ventures will always find backers. The key is to build a product/service that serves a real need and build a sustainable pricing model around it.
Building a Minimum Viable Product
Try out your idea with a small set of people, especially those that understand your target market. Check with them if your idea is workable or not. Take honest feedback. Forget about what you want to hear and listen to the feedback you get from the initial customers. Then see if the customer will pay for your product or service at some point in time. If no customer is willing to pay for your offering, then it doesn’t work. Somebody should be ready to pay for it at some point in time.
A differentiated startup
To my mind, three things are very important. The first is that the founder should have strong conviction about his/her idea. Not only should the idea address a customer pain point but it should be something that is needed by a large set of people. Secondly, building a startup is always a team work. The team can consist of even two or three people, but if its only one person, the probability of failure is higher. Startups require a lot of energy and emotional burn is very high. Therefore, at least two people should be there to run the show. Finally, founders should dump the fear of failure. You should go with an open mind. If your venture works, nothing like it. If not, then that’s not the end of the world.
Predictions for 2016
In 2016, more startups will come up as life is increasingly becoming more complex. As people’s priorities change and consumer interests shift, many more tech startups will be needed. India will see the evolution of more tech firms in 2016 compared to the previous two years. However, startup failure rate will only go up. In 2016, seed funding may be easier to secure. However, bagging Series A funding will be more difficult than ever.
Entrepreneurs should be really passionate about their startup. They should live, eat, drink and breathe their idea. Don’t worry about the outcome as long as you are focused on the problem you are trying to solve. If you think solution A does not work, look for solution B or solution C. Key is to find solutions to existing problems without losing focus. Thirdly, entrepreneurs should not waste too much time in chasing investors. If the idea is good and the problem you are solving is indeed a real one, money will automatically follow.
Cash burn in startups
I think cash burn will happen because a startup is always trying out new ideas. If your core offering is gives a convenience to the consumer, a revenue model will automatically develop. In the initial days, money has to be spend. It’s a bit like investing in innovation.
Key to profitability
Make your customers taste the benefit of your product and demand a pricing appropriate for the convenience you are providing. You may give some temporary discounts and initial benefits but make the consumers start believing that your offering will not be free always. Providing things for free is not the ideal thing approach to business. There should always be some cost or fee charged for the service render.
Siddhartha Pahwa is the CEO of India’s largest radio taxi company Meru Cabs. Before joining Meru in 2011, Pahwa was president – supply chain & generics at Abbott Healthcare. As told to our correspondent Varun Arora.