In recent months, there has been a spate of unexpected news about startup layoffs and shutdowns. Many of yesterday’s stars have lost their sheen- leaving investors furious and, customers confused.
Attention-grabbing startups like PurpleSquirrel, LocalBanya, TalentPad, Trevo and Peppertap have disappeared from the radar. While high mortality rates are commonly expected for startups, 2016 appears to be specially jinxed for the entrepreneurial spirit. This is ironic as at the beginning of year, the ‘Startup India. Stand-up India” initiative was launched with great fanfare and hope.
Some economists are wondering if these are symptoms of a deeper problem - the beginning of yet another startup bubble burst. Many industry stalwarts have started raising questions on the inherent potential of much-touted market segments like ed-tech, food-tech, and hyper-local shopping.
The situation is certainly not as gloomy as is perhaps being painted. For every startup that falters, there are many others like Inshorts, Practo, Delhivery and Byju’s that continue to innovate, scale and deliver (reasonable) profits. The global economy clearly is not as robust as before, but the recent shutdowns must not be seen as a sweeping statement on the future of innovation and entrepreneurship in the country.We should, instead, see it as an opportunity to reflect on our mind-set towards startups.
In a “Jugaad” nation like India, Startups have been a part of our economic and cultural fabric. While the term Startup is new, our history is rich with examples of visionary founders who have started and built iconic businesses. However, I do believe that we have over-played our hand through the use of the word Startup.
Of course, there can be no great end without a start, but the “starting-up” angle is perhaps unduly emphasized in our conversations and analysis. We see far too many starry-eyed youngsters focusing all their energies on attracting funds and simply launching services or products - which is quite a myopic view on building solid businesses.
Business success can’t, and should not be, measured by high valuations, or the ability to simply launch a product or service – with or without paying customers. Instead, it should be defined by building a sustainable profit-making enterprise.
Many engineering and management graduates are opting out of placements to start their own ventures. Others are discarding offers from multinationals to join Startups. As a society, our ability to deal with entrepreneurial risks is steadily increasing. Let us use this renewed spirit solve the many challenges India (and other countries) face. Unfortunately, too many Startup ideas are ‘me-too’ ones, far too many are ‘technology for technology’s sake’ driven.
Let’s harvest our Jugaad DNA for going beyond short-term fixes - to solve large-scale problems through breakthrough innovations. Let’s learn from recent failures and have a single-minded focus on building enduring organizations.
(Observations and recommendations shared above are personal.)