Here is an attempt to encapsulate the life of a startup in one picture. Let me know your feedback, and I can then request other entrepreneurs to kindly contribute the same.
The format I have chosen is to represent the optimism or happiness of a company (not just promoters, but the team) on a time axis. I have found this to be more representative than simply revenues and profit graphs, and I will draw the contrast below. So here it comes —
This is only for the duration that I was actually present at JobsAhead, i.e. inception to end Dec 2004.
Few observation:
1. Notice the early transition from ZipAhead to JobsAhead – I reckon we’d be dead in the first quarter of this chart if we hadn’t done that. The business model we started from wasnt the one that got there.
2. The first peak is the dotcom boom. Notice that since we had raised money, while the dotcom bust had a plateuing effect for us, it wasnt the worst thing to happen, especially since we had a very successful launch. For businesses that couldnt raise money, it spelt doom. There was a window from Nov 99 to Mar 2000 when money was available — this short span of capital availability is part of the reason why Indian internet space remains under-developed from a supply side.
3. The real thing to hit us was the IT slowdown (that was our major customer base) followed by 9/11. That took us close to death. It also meant that we had to shift the entire customer base from IT companies to recruiting agencies. The customer segment we started from wasnt the one we survived on (though later, direct companies gave us the growth).
4. Cash breakeven is a defining point in a company’s life. The bounce in the steps changes! and you have to reorient the entire team back to thinking growth rather than survival. The high volatality in the beginning is all a cash flow game.
5. Building leading businesses is a time-taking and hard process. If I were to draw the revenue and profit graphs on top of this, they would follow the normal S-curve kind of pattern (since we were driving market adoption here) except for a slow-but-still-positive-growth 2001 (IT bust) — no surprises there — if you can stick to those ones that drive the company, life would be much smoother. We perhaps learnt it by 2001, and implemented by end of that year.
6. Part of the pain that came during IT bust was in building the cost structures ahead of revenues, in anticipation of high growth expectations that the dotcom boom had created. Costs fall like feathers — very slowly. It took us more than a year by the time we chipped and chipped away at unnecessary overheads.
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Alok, as we discussed, here is the link to some additional thoughts on your article http://corporaterat.blogspot.com/2006/01/life-graph-of-startup.html
Hi All,
I am here today, though I knew this forum existed for a few months now, on some specific details on venture funding. I got what I wanted!!!
I have been part of a couple of busts and a successful take over.
Busts happened because there wasnt a serious effort in taking the downward curve head on to find a solution and understand what was going wrong and how to capitalise on the strength of a particular project. I feel every project does have its strengths but the management has to find them and nurture those strengths with conviction so that it overcomes all the weaknesses. For that one needs to be alert at all times and like how Alok said, it was that insight the management got from the traffic on a specific channel at Zipahead that made Jobsahead a seperate business in itself.
I worked with Alok at Jobsahead but I must say that I wasnt as lucky as a few others were in learning how they fought the near death scenario in 2001. I joined Jobsahead when it was showing signs of growth in 2003 and it was one exilerating experience. I am happy today that the business, which was sold to Monster created quite a few Lakhpatis, though I know all of them would have prefered being Lakhpatis in US dollars and call themselves Millionaires. That apart, being part of a successful venture is a different high!!!
I now work with a company that generates brand demand in the digital space, not only internet but Mobile etc .. http://www.tribalddbindia.com & http://www.tribalddb.com part of the DDB worldwide network.
Anyone who needs any kind of help in the above topic (Brand Demand In The Digital Space) can write to me.
Cheers
Ram