Learning the start-up ropes

Cut the Crap and Jargon 

Lessons from the Start-up Trenches 

Shradha Sharma and T N Hari

Penguin Random House India 

310 pages; Rs 499

This book offers you a ringside view of a start-up’s journey, Deep Kalra, chairman and group CEO of MakeMyTrip, rightly points out in his foreword. Being part of the start-up industry, the authors – Shradha Sharma is the founder and CEO of YourStory and T N Hari is an advisor to entrepreneurs -– know the world they are writing about only too well. Their primary aim is to tell start-ups how not to fail by inadequately planning for the little things, which they call the “horseshoe nails”. There is, however, an upfront disclaimer that the book is not a sure-shot recipe for entrepreneurial success. 

The writers set up the tone at the start by offering examples of how to differentiate between the right and wrong employees through a conversation between a manager and an employee. In the first example, the manager tells employee 1 to fix a crisis related to business travel in the organisation because staff travel claims have not been settled and payments to service providers have not been made in the absence of a clear policy. This is not part of his role, but Employee 1 is enthusiastic enough and promises to get back with a plan to settle the mess in a day. In the second example, the manager presents the same case to Employee 2 and the answer is ‘’I don’t think this assignment will help me add anything meaningful to my CV…There is nothing strategic about it…’’ When told about the urgency of the job, Employee 2 makes a demand, “It would call for substantial effort. Can I expect the company to consider a bonus if I get this done?” 

Needless to say Employee 1 gets to resolve the issues at the travel desk and clear the backlog. Ms Sharma and Mr Hari write, “What she (employee 1) did, in effect, was very strategic. But strategy was in the context of execution….” They point out that conflict is a way of life at start-ups and those who love peace may be better off elsewhere. All this may sound simplistic but could serve as useful tips for someone starting a business.

The book also analyses the funding craze and the strategies of marquee investors such as Tiger Global and SoftBank as well as of e-commerce players such as Flipkart and Amazon with the insight that only insiders can have. For example, “In some cases, even successful entrepreneurs suddenly discovered to their utter chagrin that clauses they had thought were innocuous in the term sheets came to haunt them when the implications of the fine print dawned on them. Liquidity Preference was one such clause.” 

If 2014 was the year of euphoria, 2016 was time for a reality check, the writers say, while introducing readers to some interesting terms (if not jargon that the authors want to cut out). “Those who had no hope of salvaging the situation were sold off for a fraction of their peak valuations, and a new term in the start-up lexicon was introduced to describe this—jabonged.” Jabong, a start-up funded by Rocket Internet, was acquired by Flipkart at a fraction of its peak valuation. Drawing up comparisons with the sub-prime crisis of 2007 when Lehman Brothers collapsed, the writers fast-forward to 2014-15 in the start-up world. Through conversations between founders and investors, the book comes to the point that “if you are an investor or a VC, beware the ideas you fund. If you are an entrepreneur, beware the ideas you pursue”.

Another interesting chapter, though a bit didactic, is on the five habits without which a start-up cannot survive. Be assertive, de-clutter and un-complicate, manage time, envision, anticipate and be proactive are the five principles to be followed, the book tells us. Are these habits not useful in a mature company too? Why talk of them in relation to start-ups alone? The answer: “If these habits are not demonstrated every day in a mature company, things will not get out of hand and the world around you will still be in one piece. In a start-up, all hell will break loose!’’

There’s stuff on the personal experience of running a start-up too. Ms Sharma describes her meeting with Ratan Tata who invested in YourStory. The writer, in this case the entrepreneur in search of funds, was late for the pitch meeting with Mr Tata. She was given 15 minutes for the pitch and was late by five minutes. “After blurting out a cursory apology, I launched into my pitch. All my preparations didn’t help me. Quickly I decided to dump all the spiel and speak from my heart… [Mr] Tata decided to invest in YourStory. This was my biggest moment….’’       

     

The book devotes plenty of space to hiring right at a start-up and on the most difficult aspect — the decision to fire. “Most managers look at exits as a necessary evil that they should somehow get over with. On the contrary, they are great opportunities for sending the right messages to teams if they are handled with finesse and clarity.’’

And of course, like many other books on start-ups, this one too acknowledges the efforts of NITI Aayog, the Government of India and Prime Minister Narendra Modi for encouraging entrepreneurship.