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.
- Promoters or Entrepreneurs – A choice for Private Equity players - August 3, 2019
- Startup Marathon Mindset - March 25, 2019
- What’s your Customer Culture? - March 4, 2019
Interesting questions Ramashish. Let me try and answer some of those, though entrepreneurs can go on forever if you ask them to talk about themselves
– Managing transitions — the key is managing mindset changes, and being able to challenge your (originally correct!) assumptions again and again. Specifically:
[1] Listening to the market. Its important to hit the right balance — too much and “status quo” might force you to adjust your vision too much; too little and the market kills you. 80% of our customers on ZipAhead were going to the jobs channel (other channels on ZipAhead were dating, ecommerce and fashion) — that gave us the signal. Note that at that stage, we thought that ZipAhead could continue being a viable businesses by itself.
[3] When we had launched, both us and placement agencies were threatened by each other. By running some trials around offline agency model, by early 2001, we had realized that we dont want to be in that business, and we were no longer threatened. So there was an openness from our end. The downturn helped us convince agencies, because they were also facing death.
[4] This is a cultural and mindset transition. When we were burning cash, the whole company (and especially, senior management) got very conservative in terms of spending on growth. We had to use the opportunity of cash breakeven to reorient everyone towards growth, and in making them believe that we have the ability to restart investing (though more in line with revenues). Taking the fear out was critical.
– Alignment of front facing functions — our sales force till 2003 was generic in terms of skills and segments. This allowed us to reorient them where we wanted. When we started going out after placement agencies, a couple of sales people had some early success, and we made sure they looked like heroes. Going to placement agencies can sometimes sound less sexier than going to big corporates — we made sure every sales person understood that this is what the company would recognise — through direct and indirect incentives. As we got into high growth mode, we needed to focus on each segment individually, and the front line got more specialized in role (now the people who were going to placements agencies was a different profile than those going to large companies)
– “Smoothly” is clearly if we had invested slightly ahead of growth (though that is a hard thing to predict), and not made commitments to non-revenue items, such as office building etc. “Still bigger” — well part of that desire is what made us to look at the acquisition by Monster, and JobsAhead is much bigger now that when we sold it! Apart from that, execution capability in terms of the sales force was something we always thought we could do with some more. I think we did a great job at the product, and I believe competition still hasn’t caught up there (2.5 years after the last round of major changes).
– My confidentiality agreements do not allow me to share financial details on JobsAhead
Do mail me if I should set up an account for you to directly be able to contribute. If you only want to comment to posts, you have all the access you need!
Alok
Hi Alok,
Firstly, this certainly is one of the best one-picture description of life-of-a-startup atleast I have seen yet.
Some questions:
– What did executing the transitions in [1], [3] and [4] operationally involve? Were there any casualties of the process? If yes, what kinds, apart from differences with spouses, ofcourse ;)? How were they managed?
– During the transition, what did it take to align external facing functions?
– JobsAhead surely is a great success story, by all means. But still, lets do a what-if analysis, if we may. So, what are the “what-if” questions, if JobsAhead were to be a still bigger success, still more smoothly?
– Are there detailed financials (and maybe even other subjective documents) of JobsAhead available for the curious ones to see? This could be incredible learning.
btw, thanks a ton for this venturewoods effort. It sure is going to be still much more useful. Where does one give suggestions? Should I mail them directly?
Thanks.
cheers,
shish
Chanced upon your blog by accident, Alok. Enjoying it thoroughly. Will keepcoming back!
Hi Alok,
Really nice summarization, We at MyZus too are in the middle of a rollercoaster ride,Hopefully we also aim to achieve possible mergers/acquisitions on the ride.
cheers
satish
Alok, thats a good overview for starters like me. This gives me an insight of what to expect and helps in chalking out a plan and a backup plan possibly