From Startup to Sustainable Corporation

“What does happen after your 20 minutes of fame? Do you remain a passion based startup or a TechCrunch achiever?”

Startups run in small groups or teams, originally with two or three co-founders having a living room or a garage with a couple of laptops or computers and plentiful flair and fervor to change the world. With such features and a relaxed working culture, they are in process-free surroundings, supple and highly compliant to change. This makes them pioneering.

However, startups have towering rates of crash. Eight out of 10 are unsuccessful, according to an up to date study by Bloomberg. Startups fail for numerous reasons: niche/target market, team, business model, product, design, and often execution. There are so many startups that had roughly all the elements required to changeover into a sustainable, high-growth enterprise, but were lacking direction, guidance – and often a skilled leadership team. Building a startup is hard – transforming it into a high-growth business is even trickier, and often calls for a different expertise set than in the premature days of a startup.

There are many possible reasons for the failure of a startup:

1. Their initiative doesn’t exclusively solve a huge problem. Differing to the adage, “Everything that can be invented has been invented,” the more multifaceted the world gets, the more there are to resolve. That said there should be gigantic problem and a lot better solution than what’s available.

2. They run out of money. For every startup, there are scores, maybe thousands that run out of cash for reasons like: they don’t want to leave a piece of the pie, they don’t budget wisely, they don’t map the time taken to raise rounds of funding, the burn rate is soaring or some combination thereof.

3. They create concepts, not complete products. Concepts are fascinating, but consumers buy products they can actually use.

4. There are big holes in the strategy. Small issues like availability of components and infrastructure, low-cost materials – end up becoming showstoppers.

5. The team does not possess what it takes. Some people just can’t get along, while others fall apart when the original strategy fails, as it frequently does. Still others are there to make a quick money and aren’t committed to the work.

6. Competitors are tough. Competitors who have existing solutions don’t give up easily

7. They take bad advice from the wrong people. With all the excitement over entrepreneurship, the amount of information has gone way up while the value has gone way down. That means entrepreneurs are obtaining lots of bad erroneous from unqualified sources. Sad but true.

8. They’re not agreement builders.  Yes, sometimes they do ask smart people excellent questions, but in the end, they believe their own gut to make the concluding call. They have no endurance for the status quo. 

9. Their effort is like a religious cult. They have a burning fervor for what they do and a worship for it that defies logic. This is why they often forget small things like individual hygiene, eating and sleeping. And they put up their companies in their own picture. They put the “cult” in enterprise culture.

Successful founders have huge chips on their shoulders, they’re hungry for information, they sustain to solve problems, they bring business and they are in it to win it. For some, the definition of “win” is to change the world or make a dent in the universe, achieve the impossible, be the best or beat the competitors. The million-dollar question now is this: Are these the pre-requisites for becoming a successful entrepreneur? No.

A start-up has various stages in its life cycle: Discovery, validation, efficiency, scale, sustain and conservation. Different mentors are required for different growth-stage startups

While guidance for the Discovery and Validation stages are covered by incubator programs, the knowledge and skills needed to create sustainable high-growth startups, are very different. It is recommended that the mentors and advisors are not only a functional fit. They should also have very specific industry familiarity which they can distribute with their mentees.

Few of the competencies for startup mentors may be: marketing experts, investment advisers, product designers. However there are some functional parts that growth-stage companies need advice with organizational structure, management systems, International expansion, Strategic alliances and partners, Buy vs. Build, etc.

I think it is essential to keep emotions away. One can be zealous and really passionate about something. However, it is essential to keep baseless emotions away. Second, people get scared about not making money. This is very natural. It is very important to be a manager in the true sense – create a spreadsheet, plan well and know when the company will make money. One should be willing to take risk with a plan for a year in advance. Founders worry about the business not running well. A back up plan is a must have. Finally, the intentions should be very clear– why starting up, what you need, what is the deliverable.



(This article is written by Debalina Haldar, class of 2015 student at IIM Lucknow. Her novel, The Female Ward, was published in May, 2013. She is the Creative Head and Core Coordinator of the Media and Communication Cell at IIM Lucknow. Her second book will be released soon.)

Follow Debalina on InsideIIM here.

Read this article by Shohita Choudhry of IIM Lucknow, on Three Reasons Why You Should Intern With a Startup

Debalina Haldar

an 'unlikely uncommon quintessential' engineer