Learning from start-up failure

In Sidharth Rao's How I Almost Blew It, besides the stories of the entrepreneurs, what keeps the reader engaged is the writer's observations on the start-up world

Coming from the co-founder of Webchutney, a leading digital agency, How I Almost Blew It is a collection of start-up stories that is  both authoritative and convincing. As the title suggests, Siddharth Rao’s first book is about how successful entrepreneurs have so often been near the end and how they have come out of it either through their decision-making or sheer luck. In all 17 stories, whether it’s Sanjeev Bikchandani or Ajit Balakrishnan, Deep Kalra or Deepinder Goyal, the fiascos have proved to be critical life lessons. 

Having started Webchutney (later acquired by Dentsu Aegis Network) at age 19 in 1999, Mr Rao has gone through the entrepreneurial grind himself. In his debut book, he has used his own insights to offer a perspective on the variety of experiences the protagonists have gone through. 

Zomato’s Deepinder Goyal is a case in point. Mr Goyal, who has been in the headlines recently over the company’s controversial premium membership plan, Gold, prompting restaurants to threaten logout from the platform, has been through crises before. When the food delivery app, which was initially only a search and discovery business, was on an overseas expansion spree, it failed in many geographies. “Dubai’s success gave us the false confidence that we could walk into any market, launch our website and win….We went crazy after perhaps launches in 10 countries in just six months. We failed in half of them and realised that the one-size-fits- all approach doesn’t work when you are launching in multiple markets,” Mr Goyal told the writer. 

From that mistake, Zomato learnt to innovate for individual markets based on local requirements. Most rapidly growing companies including Uber are doing this—customising their products not just according to the countries but also according to the cities where they are launching.

  

That was not the only challenge for Zomato, which recently laid off 600-odd employees. The food delivery scene was getting red hot with companies such as Swiggy, TinyOwl and Foodpanda attracting marquee investors, Mr Goyal realised Zomato had to get into that space. It did in 2015, but within a year the market dynamics changed completely. “Food tech, the darling of every VC was predicted to reach $78 billion by 2018, growing at 16 per cent YoY,’’ Mr Rao says, capturing the spirit of that time. The next line is telling. “Of the 105 food tech start-ups launched in India in 2014-15, only 58 were still around by 2016.’’

Like others, Zomato had begun to struggle. It laid off people and shut operations in many markets. The lesson learnt from that experience, according to the writer, is that it’s just a matter of time before everything reboots and bad apples fall away. “But in that moment, it doesn’t mean that we can sit tight and not do anything about it. We have to act and move faster. As long as we do that, we will win,” Mr Goyal told Mr Rao. According to the writer, Mr Goyal and his team would have none of the foolish chivalry or swashbuckling and that they were not afraid to turn their backs on a fight they knew they could not win. Mr Goyal corroborates: “We are happy to run away from any battle that could potentially kill or drain us in the long term.”

MakeMyTrip’s Deep Kalra “almost blew it up,” too. The first instance was at the peak of the dotcom bubble bust in 2000. Mr Kalra was in Mumbai to collect a second tranche of funds committed by e.Ventures to MakeMyTrip. Instead, Neeraj Bhargava, partner, e.Ventures, asked Mr Kalra to repay the previous tranche and buy back the 70 per cent stake the firm had in MakeMyTrip. Following friends’ advice, Mr Kalra offered e.Ventures a “distress valuation”. He offered his entire savings at that time — Rs 46 lakh — fearing all the while that he would be ridiculed. To his surprise, e.Ventures agreed on that price to sell the 70 per cent stake, taking a massive downgrade on the investment.

Mr Rao points out in the introduction to the book that several success stories — Flipkart, Paytm and Ola Cabs — have not been covered here owing to “several unpredictable factors”. He also makes it clear that he hasn’t set out to give any formula for success. “My goal is to present stories of a few entrepreneurs and prove there is no framework for success except for determination.”

Besides the stories of the entrepreneurs, what keeps the reader engaged is the writer’s observations on the start-up world. Take, for example, his comment linking start-ups and unemployment. In the chapter on Jitendra Gupta, co-founder of Citrus Pay, Mr Rao writes, it is fascinating that so many big Indian start-ups were born not out of brilliance but unemployment. Mr Gupta was unemployed for some eight months after he had given up his job as an investment banker. It seems the only thing he was sure about was that people valued his opinion on payments, encouraging him to start a financial technology company.

Mr Rao’s take on “start-up pivoting” is interesting too. While on Pradeep Kar, founder, chairman and managing director of Microland, he talks of start-up pivoting as an essential term for changing strategies to make a venture successful. Nokia, he says, is the oldest and the most fascinating example of pivoting. Twitter, he recalls, was born out of a failed podcasting business called Odeo, and Android pivoted out of an operating system for cameras. 

Although the author has mentioned entrepreneurs who are not part of this book, who does he think is a class apart? There may not be a clear answer on that, but Mr Rao admits that of all the start-ups stories collected for the book, “I found Delhivery to be the most intimidating business because it is such a daring endeavour in all aspects, from dealing with blue-collar employees to potential frauds and errors.”

How I Almost Blew It: Incredible Lessons from India’s Most Successful Digital Entrepreneurs

Sidharth Rao

Westland, 298 pages, Rs 699