Indian Startups - When Business Ideas are imitable...

Hi Guys,

There was a nice little pamphlet in today’s newspaper that was an advertisement for a new intra-city logistics service started in Chennai. I was wondering how many similar services have been launched in the past one year. I can remember seeing advertisements of at least two similar players.

Almost all the new start-ups in India have been facing the same issue – Imitations. During my MBA, 0ne of my professors concluded his Strategy course saying,

‘Strategy is something that will differentiate your business from competitors providing superior Value Proposition to Customers over a sustainable period of time’

In short, if a Competitor can imitate your strategy, then it is not a strategy in itself.

For starting a business, Ideation is important. You have a good idea which can get customers and make money – Investors will pump in money. But today, I guess it is enough if you can take someone’s existing idea and pitch in quoting less competition in the field and enter into a direct cost war with your competitor.

Eternally, the companies says that acquiring a customer is important. It is all about deals, cashbacks, acquisitions and sales at any cost. But, I am not finding any of the companies providing superior service to the customer, creating relationship and making efforts to retain the customer.

If you look at any of the newer business areas that has emerged, you can find a minimum of at least two players or sometimes as big as ten players trying to catch the pie. You have Ola-Uber fiercely competing and providing deep discounts to customers and big incentives to drivers. If you consider any of the aggregator services – let it be Food Aggregators (FoodPanda, Zomato, Swiggy, etc), Grocery Aggregators (Big Basket, Grofers, PepperTap, etc), Hotel Aggregators (Oyo, Zo, GoIbibo, etc), the strategies have been more or less similar. One players enters the business. A few imitations are born. The discount war begins. Cash burns and you end up in a Catch-22 situation.

One of the key lessons taught in Strategy is that reducing your price is that last thing you need to do and that too when all other cards are exhausted. Most of these players seem to have only one card with them and that is the Pricing. Sometimes, I do wonder if these players are too myopic and are not thinking out of the box to attract and retain customers.

It remains pretty much the same with the big Daddys out there – Flipkart, Amazon and Snapdeal. But, one significant thing I find in ecommerce business is that these players are trying something to retain the customers. From my personal experience, Amazon has been trying to provide a great customer service and by treating customer as the king, they are making significant improvement in the market share.

Ultimately, I do wonder if many of the founders really have the passion to become the next big thing. Most of the Investor’s money goes into filling the pockets of founders (as remuneration) and to Customers as cashbacks and discounts (You know, it has been ages since I paid my Phone bill fully – Thanks to PayTm and Freecharge).

Happy Reading!

The Elephant Catchers - Subroto Bagchi - Book Review

The Elephant Catchers: Key Lessons for Breakthrough Growth by Subroto Bagchi

My rating: 5 of 5 stars

Hunting a Rabbit is easy, but catching an Elephant is difficult. It requires expertise planning. This is the theme of the book. Subroto Bagchi, one of the cofounders of Mindtree has used this phrase as an analogy to the growth of a firm. There are lot of startups. Many of them fail immediately. But among the startups that cross the initial struggle, a few survive the phase of Scaling. Based on his experience of scaling up Mindtree, Subroto Bagchi has outlined all the strategies that would be required by startups that succeed.

The book is full of analogies and examples. The author takes four chapters to explain what 'Scale' is and how people often misinterpret scale. He wonderfully depicts how 'Elephant Catchers' function and how how they are important for any organization. He has divided the book into five parts apart from a separate part on introduction. The five parts deal with Scaling the Business, Intellect, Reputation, People and Scaling against Adversity.

In the first part, the author writes widely on how emotions work, how it is important to identify proper salesmen and the dangers of Joint Ventures and Mergers & Acquisitions. He then says how important Equity is and how many people make the mistake of selling Equity for unnecessary spendings. He shares an event where a Newspaper approached him to give Equity and in return they would promote the company and also avoid publishing negative news (It pulled down my already poor views on Media. It looks like we have to take into account the relationship of Media with the company before accepting).

After that, Subroto Bagchi writes on how to deal with Consultants in order to get good results. He also writes about the importance of dealing with Media, where one careless sentence in an hour interview can be made as the headline. He also writes a bit about CSR and the way companies exploit society and give donations back and say they are for the society. He says firms should inculcate CSR in the way they function.

In the next part about people, the author writes about Hiring and firing people. He says often times firms forget about the culture of the firm their new executive is from. He says most times firing is not done on time and it creates problems. He also says the founder cannot be behind everything. Trusting the respective people is important and they are specialists in their zone. He also compares the Hindu mythology of Brahma, Vishnu and Siva as to how each role should be taken by specialist and not by the same person.

In the end he looks back into 9/11 events and says how Mindtree survived the phase. He writes, 'When Extraordinary events overtake us. It is time to do the ordinary things extraordinarily well'

The book was very short and crisp. With all the examples and analogies, the contents register in the minds of a reader easily. It is a must read book for any person who wish to become an Enreprenur or a person who has started a small firm.

Buy this book from Amazon - The Elephant Catchers: Key Lessons for Breakthrough Growth

Happy Reading!