The Counterstrike on Failure: Mission Positivity

Entrepreneurship is the congruence of a vision, with an urge to have a meteoric rise to success. Each one of us, have a self-defined equation for success which is built on our performance goals. The good, the bad and the ugly are all a part of it. There has never been an entrepreneur who has not confronted a naysayer. The founder of KFC Colonel Sanders began his venture at 65 and failed 1009 times before succeeding.

In a report named 'The Great Wall of Money' by Cushman and Wakefield mentioned, India is expected to witness nearly $ 4.2 billion new capital in the realty sector in 2017. The country has become a hotbed for investment for its global innovations. While Tier-1 cities likes Bangalore, Mumbai and New Delhi are experiencing establishment of a startup belt, Tier-2 cities like Pune, Jaipur, Chandigarh, Nagpur are emerging as well.

In the wake of such innovation and investment, it is important to know that 212 Indian startups have not survived to 2017. This number is 50% more than 2015, when about 140 startups were shut down. One the most popular shut down was of TinyOwl which laid off more than 600 employees between September 2015 to January 2016 and closed operations in 11 cities.

We have condescended failure as a social stigma. However, the best of learnings, both in life and business, emerges from failure, whether that is having a stronger conviction or better pilot launch or re-conceptualised software releases. When entrepreneurs allow failures to undermine their actions, it sabotages their dreams. After extensive research, we got an understanding of the syndromes which lead to startups shutting shops.

Poor Product
Undefined product in market which does not require it or in a time which does not understand it, may lead to closure of operations. If the target audience does not find the functions as a behavioural addiction or luxury pursuit or daily requirement, the startup idea will not sustain in the market. For instance, frankly.me, video microblogging website founded by Abhishek Gupta and Nikunj Jain, where people could express themselves through videos, shut operations in February 2016. In an earlier round of funding, it had raised $600k seed funding from Matrix partners. The idea could not sustain in the market because enough customers could not be acquired.

Cash Burn Out
Cash in a startup is like quicksand, especially for the founders who did not understand the difference between richness and wealth. In 2016 we saw 910 angel investors come in till the third quarter. In fact, 2016 was the best year in 9 years for private equity investments. However, spending money on unnecessary areas and failing to raise further rounds of funding may lead to startup failure. Recently, hyperlocal startup PepperTap rolled back in April 2016 for having pressure from competition like Grofers and Bigbasket and was unable to raise substantial funding.

Legal Challenges
Every format of business model has its own legal requisites. Whether in eCommerce, edtech or forming digital wallets, getting attuned with legal jargons of the business is required. Many a times, unnecessary lawsuits come in place for ignorance of law. In 1978, Apple Corps, the Beatles-founded holding company and owner of their record label, Apple Records, filed a lawsuit against Apple Computer for trademark infringement.

Richard Branson who has net worth of $ 4.9 Bn, was questioned for selling records in Virgin stores that were supposed to be for export. He avoided going to trial by agreeing to pay back taxes plus a fine. His mother re-mortgaged the family home so he could make the payment. They had the last laugh, though!

“If you're trying to create a company, it's like baking a cake.
You have to have all the ingredients in the right proportion.” Elon Musk

Disharmony Within the Team
Cofounder conflicts over equity, idea or expansion are the most common issues in startups. In order to debacle this, building a great organisation culture is a requirement. Toxic people may undermine, they may sabotage, but whatever their insidious actions and motives, they definitely have an effect on the people working with them. A startup must harness feelings of self-worth and self-mastery.

Leverage the Investor’s Network
Being domicile does not help in entrepreneurship. It is necessary to ask for help from investors from the start. If an investor has a diverse network which can help the venture grow, then that network should be utilised. Less interest in the benefits provided by the investor can be detrimental on the sustainability of the startup.

Innovation Deficiency Syndrome
Innovation and creativity acts as a fuel to any startup. Some entrepreneurs are so restless to make it to the big league that they completely negate the importance of reinventing things. Tech giants Google and Facebook have manifested the idea of reinventing its products. In fact Indian startups have already started failing at an exponential rate. Mumbai-based Purple Squirrel, an edtech financial startup, backed by Matrix, closed down business in May 2016. It was forced to shut down due to continuously decreasing sales and increasing cash burn.

Ignoring Customer Feedback
While raising seed funding or series C from international investors, building credibility always retains customers. For scaling revenue, product is dependent on the goodwill nurtured by the founders. If the innovations and modifications is performed by ignoring the demands of the customers, the startup will confront a rough path. When big companies take a wrong call, they can float on their brand reputation or throw money at the problem.

Lose Focus from the main product
Many times the services rendered by the company become diverse and start to lack clarity. Somewhere between to trying to make it big and dealing with the success when it comes, startups may lose their lustre when they start bringing out new things. Evaluation of products should be based on such things as effective planning, execution, analysis, communication and application of learning from the experiments according to the proportion of revenue stemming from new product.

Weak Monetisation Strategy
Entrepreneurs will try rebooting, bootstrapping and running the company with minimum expenses; but if the revenue funnels are not strong, the startup should not be continued. All growing startups without any consistent revenue funnel will not foster entrepreneurship.

Here is a case study. In its early days, Oracle's sales team apparently overstated revenues to boost their commissions. The company had to restate its earnings twice. As a result, its market capitalization dropped by 80 percent. Four years after its IPO, Oracle appeared on the verge of bankruptcy. It took massive lawsuits and replacing some of the senior staff with more professional managers to get the company back on an even keel. Its founders called releasing wrong earnings statements "an incredible business mistake.”

The Emotional Quotient
Without overconfidence, nobody would ever fight the odds to start their own business. However, becoming adherent to market leadership and thought leadership, startups founders will not gain any traction. Many food tech startups shut down for lack of innovation. Bangalore based iTiffin, even after raising $ 1 Mn, closed operations in March 2016. Startups founders need to go beyond their emotional tie-up to understand what the people demand.