B2B and B2C Not Comparable; Execution Matters: Kunal Bahl
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Economic systems and consumerist markets are defined by a flowing state and constant change in terms of the relationship between the service/product providers and the users. Change is nothing new in the business world. However, over the past decade progressively and more so over the past year things have changed drastically in the fundamental provider-consumer relationship and the fiscal dynamic has undergone no less than a revolution of decentralization.
The massive supply chain and business model disruption that has been inspired, driven and catalyzed by a decentralized, user first and value focused wave of Small and Mid-cap companies – manly in tech – has been at the forefront of this change. A lot of these companies are driven by an adaptive and open-minded business philosophy and hence they’ve not only made the most proficient use but also pioneered the rapidly evolving technological sector, hence providing implicit solutions to social issues along the way.
Whom better to learn more about the next generation of startups and entrepreneurs from than the CEO and co-founder of Snapdeal, Kunal Bahl. Over the course of a very enlightening conversation, Bahl breaks down digitization, the companies that will ‘make’ it, what it means for the Indian market and the core ethos that has undergone a paradigm shift when it comes to viewing startups and entrepreneurship in India.
A New Outlook
Far from being considered the trade of college dropouts without aim, trying to find needles in haystacks, entrepreneurship has gained newfound respect. The stigma that used to surround it has largely been broken down. Bahl considers this to be a mix of the torch-bearing successes in the business world lead by youth, more favourable government policies and a new business mentality finding footing in India that isn't averse to taking some risk. Besides that, Indian business ecosystems have started cultivating homegrown capital and as a result, there has been vastly better investing in tech startups.
According to him, building a business is a lot more than reaching some arbitrary multi-digit company valuation. For him, and admittedly many more especially those who do well with the consumer, it is now about providing better products. Convenience is king in these times and digitization has facilitated that to an extent that no one saw coming.
He says the fastest growing companies are the ones that are providing the products with the easier UIs in a way that is most accessible to their target audience, whether it be B2B or B2C businesses.
What Does “Change” Take?
From the perspective of the individual, especially young graduates, Bahl thinks that people skills and soft selling capabilities will make or break their entrepreneurial journey. He considers hard skills and logistics needed to “do the job well” something that any sincere learner picks up along the way no matter what. However, he feels that soft skills are something our traditional education systems don’t focus on and that’s inherently one of the most important things in business management.
In times of sudden changes, leaders need to be able to inspire their teams to reach their full potential and brave uncharted waters. You can always hire a more technically able worker but to inspire and lead is something that is in short supply these days. And it's something that’s absolutely crucial to the success of a company in these digitized times and the Wild West that the Internet economy is.
As for companies as a whole, he says almost everyone has jumped on the band wagon now and is trying to go digital. However, he says, the businesses must leave their old business philosophies behind if they don’t align with how the e-commerce environment works. And a pragmatic understanding of the digital economy is needed as well.
E-Com & The 2020 Slingshot
Throughout this pandemic, online businesses have shot through the roof. The incentives have always been obvious. E-commerce has always had the potential, which has recently materialized, to reach a much greater market than conventional avenues. The cost structure of the business operations is radically different for running an online-focused business. It's also cheaper.
Although the trend has been upwards for over two decades, digitization and e-commerce has eclipsed every other industry this past year. Driven out of necessity, businesses were forced to adapt to stringent measures and as a result, all operations went online. Bahl clearly states that the only companies which made it through or hope to make it through are the ones that were most open to adapting to the needs of the market. These companies also had the necessary tech infrastructure in place. Their supply and distribution chains were digitized and adapted to meet a new way of business dealing and they did everything they could to, if not grow, then at least maintain their customer base and remain in touch with the consumer needs in an increasingly physically detached business ecosystem.
From Bahl’s perspective, the explosion in digitization has been especially stark in B2B businesses. The technological solutions have been implemented very quickly, notably the efficient use of backend compiling and APIs. Cloud computing and cloud architecture has also enabled things a lot.
When asked about whether there is more potential in B2B compared with B2C businesses, Bahl said the choice is similar to being asked to choose between two of his kids. He says that the comparison is not very informative as the business models are inherently different, not to mention they exist in two different parts of the economy and hence the parameters by which we judge them will not coincide. Both the consumption and business economies need tech innovation to be efficient.
B2B does tend to be criticized for being capital intensive while B2C is considered to be capital efficient. However, at the end of the day, it all depends on the entrepreneur’s way of dealing with his business. Yes, there are interlinkages but on a whole, there is no ‘better’ business.
Where Do We Go Now?
Bahl also has a very personal view when it comes to the relation between the stock market and the pace of digitization in India. He doesn’t consider the stock market to be too indicative of the digital economy, over the short term at least. Being asked about the idea that startups should list for IPOs, he says that although the company needs to incubate as a private entity for the beginning part of its life, after a certain stage it is definitely more beneficial to enlist on the stock market. This idea is driven by his view that the future of any economy rests on the large, capital heavy tech companies with a really good infrastructure al across the board, be it in operations, HR or fiscal management. Without the presence of local large-cap companies leading the way for acquisition and implementation of tech in businesses, local companies might be susceptible to too much invasive international influence where the MNCs might take over the promising Indian startups. Having homegrown big market players is essential for both investor and business confidence in any economic environment.
Consequently, he also believes that companies should be allowed to enlist on foreign stock markets. He believes that if you are trying to build world-class companies you need to be open to world-class capital. At the end of the day if a company is founded in India, has its tech based in India, operations and management being headed in India and the supply and distributions chains being under the aegis of Indian departments, then the investments made internationally will find their way back to India.
Besides this, there is tremendous soft power to be gained internationally by establishing branches of reputed Indian companies overseas. Not only does it garner more investor confidence, it also leads to multilateral integration of business acumen between India and the rest of the world.
To sum it up, Bahl considers the future of India to be very bright in the digital economy space. He encourages young graduates to take risks early on and take a shot at either being a part of or establishing startups. He considers innovation in the e-commerce sector as the gold mine for consumerist economies where convenience is quickly becoming king. But at the same time, he advises us to be pragmatic and give due diligence to all the information present before us.
His one piece of advice to the youth, in short, is to take calculated risks and to never stop growing, or dreaming.