In its five-year long journey as a bootstrapped company, Edureka made some right moves, and a lot of mistakes that it learned from. Here are few things I’ve learnt from my entrepreneurial journey so far.
Create value, don't chase valuation
Never be in a hurry to raise funds. Create value first, valuation will follow. Your priority should be to provide the best possible customer experience and creating value for your ecosystem, including partners, employees and vendors.
Never compromise on creating value just to create superficial valuation, if you want to lay a solid foundation for sustained growth. Imagine a news headline: "XYZ company raises Y million in funding". It is very tempting, but distracting too. A lot of entrepreneurs commit the mistake of optimizing their business for what they believe investors would like. They digress from their core vision and focus on metrics that "might" impress potential investors. This can be fatal. As a bootstrapped company or any start-up for that matter, you cannot afford to lose focus.
Funding is a means, not the goal
The later you raise funds, the more solid your value proposition would be and you would be in a much better position to capitalize on the funds you receive.
Before you go after funding, ask yourself a few simple questions:
- Can you grow without funding? If yes, for how long and by how much?
- Can funding help you catalyze your growth?
- Do you know exactly where you would invest the funds and what returns would you get?
- Is your growth restricted by the need for funds?
Answering these questions will help you evaluate whether you should go for funding. If you are extremely confident of your idea, you wouldn't really want to dilute your stake too soon. So sustain and grow for as long as you can. At a later stage, investors too, would appreciate the fact that you sustained for so long, and it would be a true testimony of your confidence in your idea.
Don't ape. Evolve
You have a core value proposition and your customers love you for it. Don’t ever dilute it. One of the biggest mistakes start-ups commit is following their competition too closely. Also, you began at a particular time, and in most cases, the competition either started off before you, or came by later. Strategies are obviously different. There's absolutely no point trying to do something just because someone else is doing it. You know your business the best, competition knows theirs. You can at best, become a cheap clone of a competitor, which is a perfect recipe for failure. Remember, your competition doesn’t kill you, your fear of competition does.
Test, iterate and scale; don't fail too big, but do fail fast!
As a bootstrapped company, you need to measure everything you do, and what you can't measure, you should do in small measures. You cannot afford to fail big, but you also cannot afford to not fail at all.You need to experiment, fail fast and move on to the next experiment. You need to continually explore new avenues for success while optimizing your existing business.
Don't be penny-wise, pound foolish
Start-ups by nature, are perceived to be frugal until they get funded.
However, some entrepreneurs take this a wee bit too seriously. You cannot afford to be frugal with investment in talent. If you firmly believe in your vision, in that special idea, you need to hire the best talent to see you through. You should also not hesitate in equipping your workforce with the right resources for success. A handful of talented employees will help you transform your business and give shape to your vision. On the other hand, mediocre employees will, at best, keep the engine running. They would require a lot of the founders’ time in micro-managing them. And this is much more expensive than hiring top-class talent.
Also, some start-ups become obsessed with having flashy, opulent, ‘cool’ workspaces. Come to think of it, you can attract talent just by articulating your mission and being honest about your plans – not by sinking money into floss.
Suspect, never believe blindly
Asking relevant questions is really important as you scale your bootstrapped business. The mindset you need to develop is to question every success metrics and get to the core of it. At Edureka, we never take statistics or results at their face value. We never fall for over-the-top results and over-optimistic projections. Staying grounded and cross-checking numbers keeps us on our feet to provide the best possible experience to our customers. And yes, we only go after statistics that matter, not the vanity ones that always show a rosy picture.
Be transparent, trust your employees
So, you have a bootstrapped company riding on a vision to succeed. You also have a handful of committed, hardworking people marching towards that goal. What is important here is to constantly engage with them and give them a realistic picture of how the business is doing. Every business has its ups and downs. Communicate the state of the company with honesty. You can trust your workforce to understand crunch times and good times alike. Let them know of it. They will only help, not hinder your growth. Also, providing a sense of ownership to your employees will go a long way in getting 100% commitment from them. Treat your employees as your co-founders and they will act like co-founders, who feel answerable to the business.
Rev up during tough times, turbocharge during the good times
It's extremely important to stay calm during tough times and focus on the core. Every time you pull yourself out of tough times, you will emerge even more confident about your business and about your people. Don't run after VCs or angels at the first sign of the ship starting to sink. You have started your business from scratch, you can pull it out of any contingency. It’s never worse that when it all started.
However, you can’t afford to be complacent during the good times. It can have fatal consequences. It is important to stay grounded and further accelerate during the good times to ease any future contingencies. If you keep your focus during the growth phase, you are likely to see fewer lows than highs in the journey of your business.
From hungry to hungrier
Never stop being the entrepreneur you were when you first started up. Your journey as an entrepreneur wouldn’t be easy, it’ll be full of excitement, tough times, tears, zero family life, sleepless nights. You’d have sacrificed a lot to get that first taste of success, achieving your first goals you set while ideating your start-up. As one of the biggest stakeholder of your bootstrapped company, the temptation would be to bask in that glory, relax for a while and reap the fruits of all your hard work. You might even be tempted to optimize your profits by diluting the value you deliver to your customers or by abandoning seemingly redundant employees who accompanied your journey. This is the time that will decide whether you get trapped into a downward spiral or embark on to the path of developing a great company.
Company culture - Yes, it matters in a bootstrap too
You should never focus on short term business optimization at the expense of destroying your company culture. There are companies that cross all limits to pressurize their employees to produce success at any cost. Oftentimes, it results in ugly fights, politics, personal attacks and a venomous work environment. You should be able to spot this early and fix it on the highest priority. Remember, you need self-motivated people to run your show. The minutest of things that affects their motivation can be disastrous.
It all comes down to the all-important “customer”
Your first bunch of customers is your marketers, your sales advisors and your well-wishers. Respect them, have conversations with them and learn from them how you can continually improve.Your entrepreneurial is a roller-coaster ride you’ll love!