Mar­ry­ing Tech & Mar­ket­ing for Biz Buy­ing, that’s Moglix for You

The Economic Times - - Power Of Ideas -

hree years ago, Shivaku­mar Gane­san was con­fronted with a sit­u­a­tion sim­i­lar to the one vex­ing consumer in­ter­net com­pa­nies to­day—a fund­ing crunch. His cloud tele­phony startup Ex­o­tel did busi­ness with small and medium en­ter­prises, but that wasn’t the kind of com­pany in­vestors were keen on. “In that sea­son, the consumer story was win­ning,” Gane­san said. “Peo­ple were not spend­ing time to un­der­stand en­ter­prise sto­ries. It was tough to get funds for en­ter­prise com­pa­nies.”

Gane­san de­cided to tweak his busi­ness strat­egy to fo­cus on larger clients who could af­ford to pay big money for his startup’s ser­vices. That cru­cial de­ci­sion has made all the dif­fer­ence and this year Ex­o­tel ex­panded oper­a­tions to South­east Asia. “I was very clear that it was not pos­si­ble to run an SMB (small and medium busi­ness) with­out funds. I had to find out what to do,” he said. Ex­o­tel has raised money from in­vestors only once since its in­cep­tion in 2011. At a time when funds have be­come scarce for all kinds of star­tups—ven­ture cap­i­tal in­vest­ments into emerg­ing do­mes­tic firms dropped by 35% in the Jan­uary-March quar­ter from a year ago—en­trepreneurs are tweak­ing busi­ness mod­els, slow­ing growth to in­stead strengthen their core oper­a­tions, and mak­ing the best of the sit­u­a­tion by, say, hir­ing peo­ple at saner pay pack­ages. Ex­penses, of course, get tight­ened.

“Get pes­simistic about rev­enue, largely be­cause funds are go­ing to shrink. Have a CFO who is pes­simistic,” said Pradeep Singh, CEO of tu­ition teach­ers ag­gre­ga­tor Vidyanext. “Make a re­ally hard de­ci­sion of cut­ting cost as fast as you can and al­ways cut more cost than you need to, be­cause you are go­ing to be wrong.” Singh started Vidyanext in 2010 mostly

with money

from his sav­ings and doesn’t plan to raise funds from in­vestors. He took ex­ter­nal fund­ing for only one of his three ear­lier ven­tures—Tal­isma, a cus­tomer re­la­tion­ship soft­ware com­pany that he had to sell in 2008 to re­pay in­vestors. “In Tal­isma, I did not cut cost fast enough,” Singh said. “I cer­tainly did not cut cost any­where hard enough. I didn’t cut my rev­enue fore­cast hard enough.” From his Tal­isma ex­pe­ri­ence, Singh has some ad­vice to of­fer on min­i­miz­ing pain if a fund­strapped com­pany has to let peo­ple go: “Rather than do one gi­ant lay­off, I did three lay­offs over an 18-month pe­riod (at Tal­isma),” Singh said. “Don’t ex­tend the pain. It is painful for the or­ga­ni­za­tion, painful for the peo­ple in­volved.”

Avlesh Singh, CEO of mar­ket­ing soft­ware plat­form We­bEn­gage that raised money from in­vestors in Jan­uary for the first time in three years, of­fered that startup en­trepreneurs should strate­gize back­wards in terms of money in times of slow fundrais­ing. “Hir­ing, growth strat­egy, sales, mar­ket­ing, it all gets aligned (when you plan back­ward) be­cause you know it’s the end of cap­i­tal. When you are up against some­thing, work back­ward,” said Singh. PRADEEP SINGH, CEO, Vidyanext SHIVAKU­MAR GANE­SAN, CEO, Ex­o­tel

If young startup founders were to pick from the col­lec­tive ex­pe­ri­ence of more se­nior en­trepreneurs, this is what else they should be do­ing in th­ese tough times: Fo­cus on core busi­ness strength and not ex­per­i­ments; re­duce mar­ket­ing ef­forts; and max­i­mize cus­tomer ex­pe­ri­ence as happy cus­tomers will stay even dur­ing bad times.

The idea is to un­der­stand that down­turns and up­turns are part of the nat­u­ral busi­ness cy­cle and that good busi­nesses can sur­vive on shoe­string bud­gets. The im­por­tant thing is to be trans­par­ent about the fi­nan­cials to win the trust of em­ploy­ees, cus­tomers and po­ten­tial in­vestors. “Don’t re­main se­cre­tive about your com­pany’s fi­nan­cials,” said Paras Cho­pra, CEO of an­a­lyt­ics startup Wingify, which is boot­strapped. “Peo­ple un­der­stand, peo­ple are not fool­ish, they know busi­ness goes up and down, they know en­trepreneurs take risk. But what peo­ple don’t forgive is lying.” Not all has to be bleak dur­ing a fund­ing win­ter. The present slow­down might just be the right time to hire ta­lent at sane salaries and con­sider sign­ing se­nior ex­ec­u­tives by of­fer­ing stock op­tions rather than fat pay­checks, which will, in turn, bring deeper com­mit­ment from them. “Peo­ple are avail­able at rea­son­able salaries (dur­ing down­times),” said Hemachan­dra Javeri, chair­man of sports ap­parel startup

Zeven and co­founder of Fo­rum Syn­er­gies (In­dia) PE Fund. “You can also get into part­ner­ships be­cause every­body is in a re­al­is­tic mood.”

Star­tups should also con­sider sell­ing them­selves while si­mul­ta­ne­ously look­ing for funds, said Sanat Rao, ven­ture part­ner at IDG Ven­tures In­dia and part­ner (M&A) at soft­ware prod­uct think-tank iSPIRT. “When you have six-nine month win­dow while you are in the fund-rais­ing process, you also have to be look­ing for strate­gic op­tions (to sell) in par­al­lel. That helps you have mul­ti­ple op­tions,” said Rao.

Also, in tough times, hav­ing a ‘buddy en­tre­pre­neur’ can be very help­ful, Rao added. “At iSPIRT, what we have found is that even in good times it is im­por­tant to have a buddy. That buddy has to be an­other en­tre­pre­neur, some­body from the same do­main who has gone through all of this be­fore. In the M&A pro­gramme in iSPIRT, there’s al­ways a buddy sys­tem and it is com­pletely con­fi­den­tial.” PARAS CHO­PRA, CEO, Wingify SANAT RAO, Ven­ture Part­ner at IDG Ven­tures In­dia and Part­ner (M&A) at iSPIRT Foun­da­tion

The idea is to un­der­stand that down­turns and up­turns are part of the nat­u­ral busi­ness cy­cle and that good busi­nesses can sur­vive on shoe­string bud­gets

Moglix team with founder Rahul Garg

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