Strategic connections are crucial for success, especially in the world of startup mentorship. Recently, in an enlightening exchange with Aneesh Khanna- a Startup incubator and an Early-Stage Entrepreneurship Consultant & Coach, we delved into the significance of strategic networking for startups.
Aneesh recounted guiding an AI startup in the spiritual domain, navigating the challenges of securing funding despite possessing a promising MVP and government grants. Recognizing the hurdles posed by initial traction and solo founder status in engaging traditional investors, Aneesh proposed a novel approach. He advised the entrepreneur to target operators within complementary sectors of the spiritual landscape, seeking their involvement as early-stage investors and strategic partners. By leveraging their expertise and networks, the startup aimed not only to secure funding but also to catalyze customer acquisition and product development.
This proactive shift in strategy exemplifies Aneesh’s adeptness in navigating the intricacies of startup growth, underscoring the invaluable role of tailored networking approaches in fostering entrepreneurial success.
The startup ecosystem is dynamic. Could you highlight a trend within the startup landscape that you find particularly intriguing or impactful for entrepreneurs today? How can early-stage startups leverage or adapt to this trend, based on your observations and experiences?
A recent trend in Consumer and D2C product categories, is how ‘Quick Commerce’ is slowly becoming a channel of choice over eCommerce and Marketplaces. Bernstein Brokerage’s report released in January 2024, pegged Blinkit with 40% market share, Instamart with 37-38% and Zepto with 20%, in the Quick Commerce sector. The report also shared how the current ecommerce market share based on Monthly Average Users, is losing its share to quick commerce companies like Blinkit, Instamart and Zepto.
Quick commerce faced a lot of criticism in 2022 and early 2023, over the merit and need for a 10-minute delivery. But things seem to be looking up for the sector. Blinkit doubled its GOV (Gross Order Value) from quarter ending December 2022 to December 2023. The Zomato-owned company has also claimed that over 70% of its dark stores has a positive contribution margin and close to 20% of the dark stores had greater than 5% Contribution margin (Gross Merchandise Value less variable costs).
Recent examples highlight the current trend towards quick commerce. Shantanu Deshpande, Founder at Bombay Shaving Company and Bombae, noted the significant rise of quick commerce, with Blinkit surpassing Amazon sales on a single day in February 2024. This shift underscores the consumer’s growing preference for immediate gratification. Similarly, Kiran Shah, Founder of ‘Go Zero’, a guilt-free ice cream brand, emphasizes the importance of quick delivery platforms like Zepto, which have become the primary sales channel for impulse products like theirs since launching in July 2022.
As Entrepreneurs, if you are building in the Consumer space, even if you are not a Digital First company, you need to think about Quick Commerce as a primary channel. Particularly if you are looking at early adoption for impulse purchasing. Also look at smaller packs and mixed SKU packs, to encourage trials on Quick Commerce platforms.
In your experience working with early-stage startups, could you share a specific case where applying the right tools at the outset significantly influenced a venture’s success? What tools or methodologies were crucial, and how did they impact the startup’s journey?
I mentored an Ed-Tech, very early-stage startup in the alternative medical education space. Their consumers were Medical aspirants and existing medical students. Not having a large marketing budget, they relied on social media and web content to spread the word. However, this had limited results in attracting students to the elearning platform.
I recommended that we look at creating a National Channel, what we termed as ‘Student Ambassadors’, who would become associates of the startup, in their respective colleges and spread the word. The Student Ambassadors would be given visiting cards, a small budget for local promotion, incentive for every paid student they brought on to the platform and recognition to put on their Resume. We realized that students would rely on each other more for recommendations, since they are aligned on common aspirations and behaviours, rather than the direct communication from a new startup.
Getting ‘Product Channel Fit’ can be as important as ‘Product Market Fit,’ and this can also happen with a frugal bootstrapped budget. The startup is planning to roll out this channel strategy across the country in the weeks to come.
Startup incubator
Early-Stage Entrepreneurship Consultant & Coach
Startups often struggle with defining a strong brand value proposition. Could you share an instance where a startup effectively crafted its brand value proposition under your guidance? What were the key elements that differentiated them in the market, and how did it resonate with their target audience?
I have worked closely with a Health Tech company that is involved in the Digitization business for Hospitals and Clinics. This is entirely a B2B brand, which needs feet on the street to add more business, across geographies. I recommended to relook at the branding with the Entrepreneur as the face of the brand.
In a B2B business, most people in the ‘Buyer Group’, across departments like Finance, Purchase and IT are on Linkedin. So I recommended him to an excellent Linkedin Growth and Branding Consultant, to help carve out his story on Linkedin. This is currently work in progress, but he is already feeling the positive network effects and offline recognition for bearing out his personality, beliefs, vision, purpose and his WHY on the social platform.
Reflecting on your consulting practice, what are five actionable tips you frequently recommend to early-stage entrepreneurs aiming to build and sustain a successful venture? Can you share a specific example where implementing these tips led to notable success for a startup?
Be immersed with the Problem and the Sufferers
Some solutions are really ‘painkillers’ over being vitamins, but sometimes entrepreneurs just focus on the features and the WHATs of their business V/S what the solution actually means to the ‘sufferers’. I remember hearing Ghazal Alagh from Mamaearth on a podcast, where she mentioned how after the first 6 months of having a baby, mothers trust other mothers a lot more than the paediatrician. It is impossible to get such a consumer insight, without active conversation and ear to the ground.
When carving the solution, be Customer First & Product Second
Entrepreneurs are often guilty of building a tech solution which is really feature heavy, because they fall in love with the product development.
In fact, for any product or service, in the development phase, it is so important to keep talking to consumers, to ask them, what they really need.
Eric Ries’ Lean Startup methodology claims that being in ‘stealth mode and doing secret beta testing is obsolete’. Feedback of Customers matter more than secrecy and that yields better results, through building an MVP and then revising it through multiple iterations.
Always track your Unit Economics on a Monthly basis
Unit Economics starts with understanding of what a consumer is ‘willing to pay’ as a fair price. It then requires a sound understanding on the making costs and more importantly variable costs like payment gateway, logistics, sales commission, listing charges, performance marketing, branding costs etc. Understanding the costs at a unit level is an important skill set, along with understanding your Gross Margin and Contribution Margin.
For instance, in my own Home Healthcare startup, we meticulously tracked monthly unit variable expenses. These expenses primarily comprised salaries for our Phlebotomists, the cost of blood collection kits, and fuel expenses for home visits. I emphasize to fellow entrepreneurs the importance of monitoring unit economics monthly. It’s essential to pinpoint the reasons behind any changes, distinguishing between external factors and internal operational inefficiencies.
Create a 2X2 Competition Landscape to see the White spaces in the Industry
Creation of a 2X2 competition matrix is a simple exercise, but in my opinion it is something that is a real ‘eye opener’ for early-stage entrepreneurs.
A 2X2 matrix involves choosing 2 variables on the x and y axis, which define the stark differences amongst companies in that specific industry. The variables could be price, technological strength, level of organized operations, growth rate, size in revenues, geographical presence, number of SKUs etc.
Seek out Grants or Friends/Family/Fools or Customer Money, before the 1st External Financing Cheque
In the current Indian context, the first angel cheque is still challenging, despite there being a large number of angel groups and early-stage funds.
I firmly believe that till the entrepreneur has found Customer love at a small scale, he/she would not be in a position to utilize the funds to scale his company. In fact, a large part of the angel investment, would go towards experimentation to figure out the ‘Product Market Fit’ and most likely in performance marketing at a very high CAC (Cost of Customer Acquisition).
Your mission involves impacting a diverse range of aspiring entrepreneurs. Can you share a trend or methodology that has proven effective across various age groups and sectors? Do you have a specific case where this approach transcended traditional boundaries and contributed to the success of a startup?
Shark tank stormed into our lives a couple of years ago and has since taken the 3rd place after Cricket and Bollywood, for our post dinner family conversations. It has entertained and educated and allowed to us bridge multiple generation gaps, with reference to our Entrepreneurship vocabulary. My 12 years old daughter engages with my 78-year-old father on ARR, Bootstrapping, D2C, Valuation and so much more.
Two distinct trends have emerged in entrepreneurship: viewing it as a viable career option and misconceiving fundraising as a prerequisite. While abundant online content inspires, it often lacks the necessary framework for startup planning and idea validation. Additionally, media portrayals like Shark Tank can mislead aspiring entrepreneurs, emphasizing fundraising over fundamental business-building processes.
In my opinion, I try and create a framework to help aspiring Entrepreneurs to get smart about the building blocks of Entrepreneurship, namely Idea Validation, Competition Analysis, Product Market Fit, Minimum Viable Product, Fundraising etc. Once they understand the nuances of these building blocks, I try and impress upon the importance of frugal bootstrapping and the quest to find their first 1000 users, leading to some semblance of Product Market Fit.
