E-Paper
Global Village Idiot: A small lesson for Indian startups from a big American roots-music band
Hopefully, more founders will take such a responsible approach to understanding how business really works and how their solution must connect all the dots to a realistic release to the market. That’s when investors and consumers can participate in the excitement beyond the crafted story
I admire people who embark on a serious journey with nothing more than an idea. They take to an idea, and create something meaningful and lasting out of that requires mastery, deep-practiced ability to innovate given the mastery, and a natural ability to draw a diverse range of people to the cause, the wisdom to pick the right talent from that lot and inspire them to give their very best.
Jazz, blues, fusion are music genres that lend themselves naturally as benchmarks of this concept. John McLaughlin, BB King, L Shankar, Zakir Hussain and Vikku Vinayakram are exemplary musicians who have created legacies in this space. In the last decade, the Tedeschi Trucks Band (founded by Derek Trucks and Susan Tedeschi) stands out as an epitome of a musical organisation built upon this concept.
But what happens if we take the mastery out of the equation? Without mastery, creating something meaningful is wholly dependent on goodwill, good luck and many stars continuously aligning themselves to the cause. That seems to be the current state of affairs for the collective called Indian startups, which is standing on the threshold of the point where companies have to make a choice to stop riding luck and consciously move towards building some mastery. Mastery of what though? Numbers.
So, let’s begin with 65,861—the number of recognised startups in India as of March 2022. Another number is 100 — startups that have become unicorns in India as of June 2022. What are the prospects of the remaining 65,761? If we step back to a 2017 report from IBM (Entrepreneurial India), more than 90% of Indian startups fail in the first five years. That report (based on 1,300 interviews across the startup ecosystem) had defined reasons for failure, mainly lack of pioneering innovation, lack of experienced leadership, lack of credible mentoring of leadership teams, lack of relevant skilled workforce, lack of timely funding and poor business ethics.
Getting back to 2022 (five years since that report), most business media widely reported the news of Sequoia Capital’s India partners getting embroiled in governance issues at startups in their portfolio. Now this is at the top of the value chain. At the bottom of that chain are startup founders and management teams. In the middle lie the performance numbers that tell the story. According to industry and media reports, the trend of performance reality-divorced high valuations is over. The idea that a startup by just being founded has an x-million valuation is a myth that was long busted. Indian startup founders may not have got the memo yet. I have been working in the new company/startup space my entire career (30 years now). I have met at least 50 tech investors (mostly overseas) in the past two decades, made hundreds of business plans, investor presentations and the one common learning from all that was: beyond the solution, it’s always about how sound the business and revenue models are, how strong your actual performance is, and whether those if augmented by investment would lead to the pipe-dream painted on your future projections and by when.
Another thing that serious investors have sometimes looked at is how much money are the founders themselves committing. I remember an investor once asking a company I was consulting with: “If you believe in your idea, how come you haven’t invested some of your own money?”
When I first took a startup client in India in the mid-2010s, I was shocked with the general lack of financial understanding among founders. As I interacted with innovators and management teams, I got a sense that many were under the impression that an Excel sheet model with no real basis except percentage growth based on industry success story averages would make investors give them money. Raising seed money and even an initial series does happen often enough, but the road ahead is different and that’s where much of the 90% failures lie.
The Tedeschi Trucks band is 12 years old and currently a 12-member outfit, built around the mastery of Derek Trucks (in my opinion, the benchmark slide-guitar player/composer in the world at the moment), the songwriting and vocal mastery of Susan Tedeschi and an eclectic family of extraordinary musicians who are in varying degrees of mastery over their craft. The band is bold enough to innovate and take extraordinary risks on their new 24-song, four mini-album release, ‘I Am the Moon’. How big is the risk? To quote David Browne’s review in the Rolling Stones: “On ‘I Am The Moon’, they ratchet up their ambitions several perilous notches”.
What’s the innovation? The project, inspired by the story of Laila and Majnu, is an epic reimagination from different perspectives, in different contexts, written collaboratively by the band members. It captured my imagination because it is finally replacing the image of Rishi Kapoor and Ranjeeta Kaur from the 1976 Hindi movie about the seventh-century Bedouin poet Qays ibn al-Mulawwah and his ladylove Layla bint Mahdi set in Arabia. The Layla-Majnu narrative travelled from Arabic to Persian, Turkish, and into Indian languages through the narrative poem composed by the Persian poet Nizami Ganjavi in the 12th century. If one looks at the evolution of the band, it makes sense (in hindsight). The audience will decide whether the albums are successful but I can tell you why their music shakes me to my core: given the talent onboard, advent of digital and evolving tastes of listeners, the band could easily have gone many different ways; but they haven’t deviated from the founders’ vision and core. And therein lies a lesson for startups. Last week I found hope on the startup front. It came from two 30-minute conversations with two different entrepreneurs (one is a UX-designer, the other a founder-CTO). Both were very clear about their business and revenue models and their progressive projections of valuation based on historical numbers. Critically, they could co-relate the two, providing a believable reason for their valuation. And neither is yet looking to raise funds. “Too early, the business can fund itself, can’t dilute till I know I have something lasting to offer to my investors.”
Hopefully, more founders will take such a responsible approach to understanding how business really works and how their solution must connect all the dots to a realistic release to the market. That’s when investors and consumers can participate in the excitement beyond the crafted story.
Sanjay Mukherjee, author, learning-tech designer and management consultant, is founder of Mountain Walker and chief strategy advisor, Peak Pacific. He can be reached at thebengali@icloud.com
