Growth Pacing Startups
Date: Sunday , November 06, 2016
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Start-up ecosystem in India has seen an unprecedented growth in the last five years, particularly in the technology sector. Due to abundance of funds, not only did the existing start-ups have a shot in the arm but also more entrepreneurs got the required courage to take a plunge. The last two financial years, 2014 & 2015 have been the most glorious times in the history of the start-up ecosystem in India. The Indian startup ecosystem has witnessed close to $13 billion funding only into tech focused startups where 50 percent of this fund has been pumped into fresh start-ups with less than five years of incorporation!
This tide of growth has helped many startups mushroom at almost every nook and corner of the country leaving the density in the three top metros - NCR, Mumbai and Bangalore the highest! 80-90 percent of the startups are just the clones of the bigger ones who have successfully moped up huge funding and majority of them sparked the growth by utilizing the funds and creating quite an unsustainable growth model across the categories of startups. The moot question that everyone has remained elusive to, and silent about, is-what should be the best sustainable way to pace the growth? Be it boom time or doom time? The question finds relevance now like never before when the \'start-up dead pool\' rears its ugly head around the corner. So what should be the growth hacking and pacing strategy for startups in different situations and SWOT segments?
Time: Boom Time or Doom Time?
Startups in boom time like 2014 & 2015 have risen to a level just by the sheer market wave, positive sentiments by the investors, unquestioning customers and curious employees. Market expansion in four metros in less than three months, growing number of people from 50 to 500 in less than two months, all has been signs of boom-time growth with or without a synchronous growth in topline. But shaky corporate governance, weak organization culture in a hyper growth period can lead to poor foundation for a sustainable growth! But, a calculated step in footprint expansion or increasing resources during doom time will make the foundation a stronger one which will provide the necessary support for sustainable growth for years to come! There is a popular quote: Best startups begin during the bust period
Business Model: Clones or Non-Clones?
If the start-up is a clone of a bigger or more successful one then the growth will depend on how quickly the copy-paste formula is being applied successfully. But remember, clones attract clone investors only who want to replicate a seemingly successful model quickly, if that doesn\'t happen, the clone investors will not take much time to get away leaving no hope of revival! Non-clones will have to be cautious about the disruptive innovation they are introducing to the target market. The growth is tricky as they have the responsibility of \'developing the market demand first\'. Finding an anchor client or group of customers will be the first hurdle to cross before they start growth hacking just by replicating the first success-story. Though the risk is higher but the foundation of the organization gets stronger with the relentless endeavor for demand generation.
Growth Driver: Incentivized or Organic Viral?
The easiest way to do anything is taking short-cuts as business world offers countless options of cutting corners to grow sales! Temporary sales promotion tactics in the month-end is still acceptable as a fare management practice but continuous incentivized sales promotion? Would it hold the classical economics true to its essence? Probably not! The fundamental to doing business is to make profits and returns to the stakeholders, endless incentives to grow topline and eventually eroding the bottomline, wouldn\'t make any sense from any rational point of view. \'Cash backs\', \'discounts or rewards more than gross margins\' have been some of the recent tactics of incentivizing sales to bloat the top-line. No growth, based on this tactics can be sustainable for long and India\'s start-up eco-system has realized it quite late.
Then what is the best way to fuel growth? What are the economically viable and sustainable growth triggers? It has to be organic but can be plotted intelligently, which has the potential to go viral! If someone wants his brand grow skyrocketing within span of few years, a series of coherently designed viral sales & marketing campaigns will do the job! It may be difficult to crack the recipe of the viral growth but relentless customer insights and delights can help find the key to it.
These three trade-offs will remain vital for Indian Startups as the next three years 2016-2018 will witness the next phase of start-up ecosystem. Market will shape up the industry or the industry will shape up the market, both the situations are likely for Indian start-up eco-system. While the 1st phase of 2010-15 saw the boom time mainly for tech application in B2C, the 2nd phase of 2016-2020 will witness the auto-correction of it and the emergence of tech application in B2B sphere. But interestingly, B2B start-ups will learn from the seemingly difficult time testing of the B2C start-ups, so, a more matured start-up ecosystem is expected with better versions of the B2C players and the evolution of the B2B players who will have grown up from the challenging time, model and growth drivers.
B2B market is the new silver lining for Indian startup cloud; it can make way for a shining sky for the startup growth if and only if we stick with the core fundamental of doing business and making growth.