Loading ...Met a couple of people with very big ambitions, perhaps bigger than they can handle — makes me think that trying to build a billion dollar company from day one might not be such a good thing afterall. Wonder why huge companies “got built” when large markets and good solutions existed (rather than founders starting out with a mission to build a huge company.) Somehow the strategy seems to go haywire when you forget the first million and the next 10 million milestones. Other than the fact that the skill sets required at each stage are also different.
Even elephants are born as babies.
Here is a wonderful post by Joel (on software) on precisely the same issue:
http://www.joelonsoftware.com/articles/fog0000000056.html
That was written in summers of 2000, but it is still very relevant. While i myself do not agree with some of his interpretations, but it makes for a wonderful read as it touches upon a lot of issues and makes you think.
To summarise:
”
Building a company? You’ve got one very important decision to make, because it affects everything else you do. No matter what else you do, you absolutely must figure out which camp you’re in, and gear everything you do accordingly, or you’re going to have a disaster on your hands.
The decision? Whether to grow slowly, organically, and profitably, or whether to have a big bang with very fast growth and lots of capital.
The organic model is to start small, with limited goals, and slowly build a business over a long period of time. I’m going to call this the Ben and Jerry’s model, because Ben and Jerry’s fits this model pretty well.
The other model, popularly called “Get Big Fast” (a.k.a. “Land Grab”), requires you to raise a lot of capital, and work as quickly as possible to get big fast without concern for profitability.
..
Probably the worst thing you can do is to decide that you have to be an Amazon company, and then act like a Ben and Jerry’s company (while in denial all the time).”
Why must SIZE be the primary focus?
Of course every startup wants to be “big” one day. But, I am of the opinion that (for a startup) the primary focus should be on the IDEA - size is something that may or may not be a result of successful execution of your idea.
My 2 cents…
I agree with Ben and Jerry’s model - where every startup should try to build a solid foundation - exploring few domians and then try to levearage there strength , expertise to branch there growth process out in a more organic way.
The best approach IMO is to look out for a beachead
Rajan
I came across an interesting (ad)venturer/book - rather an account misadventurer. His is an descriptive and humorous recount of mistakes and failure steps in three failed ventures before the successful fourth. Thought it might be relevant for the venture wood audience. And possibly connect with this topic too.
http://alchemya.com/blog/DesiStartup/desi.html
Book: Blue Screen of Death
Adventurer: Jawwad Farid
BTW, Alok, How do I post a new article here. What are the guidelines. I am planning to review the book after I read the full text. And perhaps post the review here.
Startups do falter when trying to set lofty goals like that, but that kind of goal also keeps them going. It’s kind of a double-edge sword. Instead of focusing on becoming a very big company, the focus should be on providing a service which matters.
Whatever the goal is, I believe that to reach the top of the stairs, each step has to be taken one-by-one and the first steps are the most difficult.
-Animesh
Well, yes, elephants are born as babies, but as baby elephants not ants! The other way to put it, the DNA of a baby element is of an elephant. How does it relate to startups? Obviously, life of every startup is a whole different animal that too one which changes its appearance, shape and external characteristics throughout early and mid-life. Having said that (with of course all kinds of exceptions abound) the DNA (culture, decision-making, ambitions, strategy/thinking etc) of a startup is often set early on which in not so subtle ways often defines the ultimate destiny.
In my opinion thinking of building a large company is important for entrepreneurs in India who want to use angel/VC funding. Nothing is absolute as the context is important. If there are competitors who can attract talent and capital then thinking small/growing slowly is likely to fail. The current environment in India favors fast capital led growth. That said raising money without proven execution is and should be difficult so starting small and proving capability is vital.
Mona thinks more about the EXIT than the IDEA or the SIZE when evaluating a venture. The good EXIT can be as an acquisition - common, or an IPO - much less common.
If you have an acquisition planned then you can be
1. a tech acquisition - usually less than 60 M, mildly dilutive. In this scenario make sure that you are not too innovative - if the little people in the big companies don’t understand what you are doing or why it is valuable and you don’t correspond to a line item on their 3 year plan you will have a tough time convincing them otherwise and hence you will not get acquired. Also keep your burn low, especially on the sales and marketing side as that is not what they are paying for. In marketing focus on Product Marketing.
2. a revenue acquisition - here you are accretive, you will be a multiple of revenue. You must have demonstrated growth that should fit in well with an acquiring companies channel. Beside the obvious goal of cash flow positive, you need to make your self channel compatible with the acquirer.
IPO dreams? In that case just be damn lucky.
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what do u think about the goal?the goal as start as small flame,but it should keep the fire…it means …the small flame keep the power to destroy the forest.
im not agree the indian business model.it keeps one side thinking.be slow and be grow.
ya i accept your concept.but im not interest to grow some peanuts in my huge acre land.
i have some dream about innovation.for example i have prepare some basic business plan about some new invention products.perhaps its not happened ,because the need of bulk capital.
but some of my dream products should be launched by some big companies.for example now e book will be launched in few weeks as soon.but im not stop my thinking.
if you have the idia for revenue model with integrate market research and profit analysis,you never worry about keep move at fast.