Is Scaling Up on Your Agenda?
Have you heard about the ‘Leaders Building for the Next Billion’ program? This is the name given to NASSCOM’s 10,000 start-ups initiative launched in collaboration with Facebook. The objective of this program is to scale up the startup ecosystem in India by 10 times.
NASSCOM’s initiative is aimed at boosting startups at a country-wide level which is highly recommended to go beyond the incremental changes that are happening currently. The effort is targeted at developers and students engaged in the creation of apps and mobile websites for new-to-internet users. The initiative provides technical assistance, financial support and access to resources.
NASSCOM is engaged in scaling up the startup ecosystem, which will provide a stepping stone to budding entrepreneurs. Each startup also needs to think in terms of scaling up to come out of the small-business syndrome and remain competitive. Each startup needs to have scaling up as a priority item in their to-do-list. As Biocon Chairperson and Managing Director Kiran Mazumdar Shaw said “I think we need to focus on how do we scale up these very successful startups. That is where the impediments are in a country like ours because we will never be able to scale up to the potential that they have”.
What does it take to scale up?
Well, scaling up is not something that can happen overnight. A lot of planning and preparation goes into it and if done well, will give you the desired results. Scaling up does not mean increasing revenue by 10% or 15%. You have to plan for a quantum leap, like moving from a $1 million company to a $10 million or even a $100 million company. To achieve this type of jump you cannot run your company the way you have been doing since you started. You will have to start moving people into well defined roles and get the right people into key roles. Let us see what Leah Busque, Founder & CEO of TaskRabbit (an online and mobile marketplace) has to say about partnerships: “As a small business or startup, one of the factors you should always consider when looking at a potential partnership is the incremental potential reach. Note that wider reach doesn’t always mean a better partnership opportunity. Instead of sheer scale, take a look at which communities your potential partner can open up for you.”
Build up a fantastic profile that should give equal weight to the company as well as to the founder. Develop on your core competencies and gain domain expertise, then focus on the key aspects of the business. You have people who can take care of the less important activities.
Build your network by increasing your area of influence to include ‘those that matter’. Ed Bradley, a leading American journalist and TV news anchor once said: “You know, I think I still have a sense that no matter what you do, no matter what you achieve, no matter how much success you have, no matter how much money you have, relationships are important.” To achieve your ‘quantum leap’ you will need funds for which you will need to reach out to and use your relationships. Yes, you need a big financier to go the distance with you. Money is perhaps the most important element in scaling up a business. Here, I am reminded of a quote by Richard Branson, Founder of Virgin Group. “Well, I think that there’s a very thin dividing line between success and failure. And I think if you start a business without financial backing, you’re likely to go the wrong side of that dividing line”.
A widely used method of scaling up is through merger & acquisition (M&A) deals. Surprisingly, most of these deals are not with big corporate houses but with other startups. To name a few, Practo acquired Fitho, MakeMyTrip Limited acquired Mygola and Snapdeal acquired FreeCharge. Rentomo raised funds to increase its market reach to include Delhi, Lucknow and Pune. Happy2Refer will use its funds to expand its business which will boost up its customer base, product development, marketing and sales.
“I am a little worried about the way some of the companies in India are scaling. If you look at the West, some of the successes, companies, which turned billions of dollars, whether it’s a Facebook, a Twitter or a YouTube, which Google bought, or Google itself, they spent many years perfecting their product and the product grew by word of mouth and thereafter grew by other people knowing other people and network effect,” Nikesh Arora, Vice-chairman of SoftBank.
You should consider Nikesh’s comment seriously and look at consolidating your business and attracting long-term customers by providing great products and maintaining a healthy balance sheet. Anish Williams, Co-Founder & CEO, TranServ suggests some dos and don’ts for scaling up that you may find useful (the link to the article is mentioned in the references).
According to Pramod Bhasin, former President & CEO, Genpact: “Many start-ups are not focused and they never say ‘I want to be the world leader.’ Our aspirations are very small. We do not aspire to be among top 10 players in the world.” He goes on to say: “I think at times the decisions need to change. We have huge population of entrepreneurs in India but they are very raw. They do not know how to scale up their business; they do not have the expertise to market their products. They face problem in executing plans. They may not be able to penetrate overseas market.” This is something that all entrepreneurs need to deliberate on seriously. You have to turn the circumstances around. You have it in you to eliminate the shortcomings expressed by Pramod. You can take control and proactively address the issues to come out of the downbeat condition.
1. Vishal Singh. Facebook Partners With Nasscom To Scale Up Startup Ecosystem In India By 10X. 2015. http://inc42.com/flash-feed/facebook-nasscom-scale-up-startup-ecosystem-india/
2. Press Trust Of India. Indian startups need to scale up, Kiran Mazumdar Shaw says. 2015. http://yourstory.com/2015/08/kiran-mazumdar-shaw-2/
3. Eric T. Wagner. 5 Steps To Scale Your Business (You Won’t Make It Otherwise). 2013. http://www.forbes.com/sites/ericwagner/2013/11/20/5-steps-to-scale-your-business-you-wont-make-it-otherwise/#34414d2229e4
4. Gaurav Sikka. India – the world’s fastest growing startup ecosystem. 2015. http://thenextweb.com/in/2015/07/05/india-the-worlds-fastest-growing-startup-ecosystem/#gref
5. Kylee McIntyre. 4 startups scaling up in India. 2016. http://www.business-standard.com/article/companies/4-startups-scaling-up-in-india-116011400371_1.html
6. BS Reporter. Softbank’s Nikesh Arora warns startups of burning money to scale business. 2015. http://www.business-standard.com/article/companies/softbank-s-nikesh-arora-warns-startups-of-burning-money-to-scale-business-115101301325_1.html
7. Anish Williams. Scaling Up Strategies for Startups: Dos and Don’ts. 2015. http://www.iamwire.com/2015/10/scaling-strategies-for-startups-dos-and-donts/125215
8. Entrepreneur.com. ‘Scaling up is still a challenge for Indian startups’. 2015. http://www.entrepreneur.com/article/251347