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.
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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.
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.
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.
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