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
Alok,
Though off the topic, I just received the Tie, Hyd chapter invite on Jan 12th where u would be present.
As I am in US, may not be attending it, but do speak with Rahul of Indiaco and Sarat Naru of AP VC Fund.I find both are working on incubating and funding some interesting companies in the biotech and IT space.
Rahul’s Sanrasoft might be shaping out well in the days to come and Sarat Naru’s latest biotech bets might pay offl in 2006.
Try visiting the SP Biotech Park & the ICICI Park to see some biotech bets from Hyd.
Also watch out for ABL Biotechnologies from Chennai. Their EHA and DHA from algae and research on HIV make interesting watch.
Regards,
Madhu
You are actually right about the need for recruiters coming more, but would there be quality databases? Even then, I think you are right!
Rajesh
The business settling lower than at the point Monster acquired is normal subsiding of a high excitement point, which such an event generates. Notice that the state is still much better than normal.
Am not sure if I got the second question. More demand is good for job sites because every company has to come and buy job site services — you can’t ignore any channel at such a time. When supply is far higher, you get lot of resumes but monetization can be hit (since companies pay while jobseekers get services for free)
Alok
Hi Alok,
I haven’t been able to do much on this blog so far but I want to correct that going forward. A couple of questions that I can’t resist asking:
1. The graph shows the site settling much lower from the point Monster acquired. Any thoughts on why?
2. I don’t know what is the situation in other industries, but I suspect that it should be pretty much the same as it is in mine, where it is clearly a case of demand far surpassing supply. In such a scenario where people are literally hunting talent, would job sites be hit? If yes, what is the revenue back-up?
R
Hi Alok,
Thanks for such and awesome explanation. There are many things to learn here. Nonetheless, NOW when you take me out for a treat when we meet, I will know how hard-earned the money is :))
I’ll mail you reg account. Though, this is a place where better people should be contributing – i have atleast a few years to get there – but maybe i’ll post small tidbits from time to time.
One quick topic suggestion — lot of us – I for one – do not know how would a data center and development ops of a web company like JobsAhead be set up. Am I missing something which is already available on the web? If not, who would be a better person to write it! Will be good to hear that experience too! As a part of that, maybe you could include how do cost structures of such companies look like. (Looking at amazon or any such company’s reports doesnt help much, I think – pl suggest if I am wrong)
thanks,
shish