I was recommended to read “The Psychology of Money,” by a friend and my first thought was I don’t need another book that teaches me finance. But I must admit I loved the book. I wish someone had pointed me to this book when I was just out of college. But as I was reading, (and blame this on the entrepreneur in me), I saw many lessons, not just about investments and money but it's almost like a life lesson book for anyone wanting to build anything of value. It could be a solo entrepreneur building a boutique business, or someone trying to build a large tech business or someone who just wants to invest and be part of the journey.
This book is a must read. As part of having designed and developed India’ first digital tech platform for private market investing, I certainly could draw the lessons here for founders. It’s exciting to see many similarities between investing and building a company! As a founder, you should consider yourself in the business of making money!
Let us start with starting up lessons: Tails, You Win!
If you are a founder, you probably should live by this rule! There are close to 70k startups in India and we probably know only the top 20. I’ll give this a larger margin and say we probably know the top 50. That’s because being a founder is knowing that even if you followed every rule in the book, and ticked all the boxes, you might still not end up an outlier and winning the market. Building a company has many unknowns and factors you can’t control. Like Morgan Housel says: “Your success as an investor will be determined by how you respond to punctuated moments of terror, not years spent on cruise control”
As a founder, you need to decide how you want to build your venture. There is no right or wrong. You need to know what drives you. Don’t try to go on blitz scaling if that’s not what inherently motivates you. I personally think cruise control is not a bad choice. But if you make the choice, you should build a bootstrapped venture. Not raise investor capital.
I believe this because by definition, angel investors expect non-linear returns and this is only possible when you build a tech venture that can scale rapidly. If you are willing to get on to this treadmill of growth, there is no looking back.
Having said this, as a founder you should know that not all experiments in the business would work as you had designed. At LetsVenture, we have been in the startup funding space for the last nine years. Through the journey, we tried many small experiments to test what would create the inflexion point. Interestingly for us, our inflexion point came when SEBI (the Indian regulator) decided to formalize early stage investing. Our scale and growth was defined by macro dynamics and by regulation that we could not have controlled. This realization is important as you know why so many experiments fail. What we do as founders is increase our ‘probability’ of success.
What increases my probability of success? How do I get to the tail to win?
I’ll list 5 points here. Each of this deserves a separate topic, but to get the whole perspective, let me list them down:
- Are you sure you can sustain this journey (where most days are gruesome, challenging and absolutely ruthless) for the next five to10 years? From where you are in life, do you have other stress factors you are facing that would make it difficult to commit to this timeline?
- Are you passionate about the problem you are solving? Do you understand the problem like no one else does? Do you live the problem in a way that you are strongly guided by the solution you have in mind?
- Do you understand the domain? If it is a B2C company, you will need to spend a lot of time with ‘your’ customers. Not your friends talking to them about the problem. Do you know who your customer exactly is? If it is a B2B company, do you understand all stakeholders in the enterprise who would influence your solution – the influencer, the gatekeeper, the user and finally the paying customer.
- Does selling come naturally to you? If you are someone who is not good with words or connecting with new people everyday and the idea of selling gives you anxiety, then think again. Being a founder is about selling your product/service every hour, and every day. From hiring your first intern, first employee, first customer, to your first investor. You are primarily ( or rather, ONLY) selling.
- Are you a visionary? I know it reads like a tall word but you need to connect the dots before anyone can even see the dots. When I started LetsVenture, there was no Paytm, PhonePe and no UPI. Online payments was still an idea and we were building a platform where investors would commit INR 5Lakh (or 8k USD) online. The founders were not on the natural advantage side but we knew that startup investing had to be simplified. Though the ecosystem was nascent, after speaking with several founders , it was evident to me that the ecosystem would deliver. India has some of the best minds coming from the best colleges. MNCs in India were fighting to get into product roles above services role. Aspirations were changing and the market needed a solution that would make discovery of founders easy for investors. But if you try to enter the market with an intent to find a problem to solve, LetsVenture would not have been the answer. I believe that the customers do not know what they want, but only know what they do not like in the current solutions. Thus, being able to connect these dots is your job as the founder. Connect the dots and paint the picture!
To conclude, building a business from scratch is no cake walk. It involves countless sleepless nights, challenging days and occasional failures. But it is one’s perseverance and determination to solve a particular problem that keeps them going.
There are no set rules to building a scalable startup. What matters is one’s drive towards finding a solution to an existing problem and making an impact.