[Editorial Notes : The author, Saumil Majmudar is the founder and CEO of SportzVillage. If you are interested in building a business for yourself, something you want to do for a long long time – read on.]
When I quit Wipro to start my first business (in 1998), many people around me were very excited about how I will now “be doing something new” “be my own boss”, “make my own choices” “decide which day is a holiday” etc etc.
While the correctness of their assumptions is another story altogether, I found it interesting how the concept of something new was so fascinating.
To borrow a phrase from my friend, Jayashankar (SportzVillage co-founder), this was the “new girlfriend” fixation. Excitement around something new. The potential of the infinite.
The value of novelty while starting a “new new” business was amazing. Here’s how:
- Team: I got to meet people I would probably never have met otherwise. Many, very interesting people reached out and offered help. Many of them offered to join the venture, become a partner, consult, provide free advice etc. Some of them joined the journey. Suddenly hiring was not a problem.
Finding enough roles, opportunities – and money – for the great people who wanted to join was the problem.
- Investors: Since the early stage capital is “high-risk high-return” capital, investors want to invest in something new. The cost of capital or the source of capital drives an investment behavior that requires game changers. Ideally, something never done before. Something that has the potential to change the world. Something that has a hockey-stick growth curve. At least the potential to do a 100X return.
In reality, if it gives 10X, it is a great deal. And if it doesn’t work out, hey, it was high-risk capital anyway. The investment thesis assumed that 1 out of 10 will work. So, investors love really unique business ideas.
- Market: Early adopters in the market want to know about new products/services. They are keen on trying stuff out and are willing to bear the pain of a new evolving product/service. They reach out to the providers – thereby getting them critical early revenues & learning.
- Media: The media just loves novel stuff. Here is this new business that is going to change the world. As a novel start-up, you don’t really need a PR agency. Just network and folks will write about you.
So, in summary, you are able to find team, money, customers and media visibility. What else does a young business need?
As a result of the above, the start-up grows & over time, the novelty wears off.
And now, the “old girlfriend” syndrome starts showing up. Here’s how:
1. Team: The team joined because it was doing something new and nobody had a clue how to do it. Now, the “what” and the “how” have got well-established. The products/services are defined sharply and the systems/processes start coming in place so that the business can scale. But many of the team members joined because they were going to do something new! The new girlfriend is not so new anymore!
The hunt for novelty makes lots of new ideas come up. But the business needs the team to do more of the same – and better. At least most of the time. This can lead to some members of the team feeling disconnected from the business. At such times, maybe, emphasising the “why” of the business – the vision, value creation and the impact that the business will have over years – is probably critical. The new girlfriend fixation can lead to innovation for the sake of innovation – instead of consolidating a proven model.
2. Market: New players enter the market after seeing the success of the novel start-up. Each one of them perforce has to be even more novel in order to get the early adopter’s attention. In the process, some of the new products/services are not financially sustainable. The “industry” gets formed and customers start saying “Yes, there are quite a few companies like you now”. Customers, revenues, margins, processes, systems etc: all established and with enough data points to draw various trend graphs.
3. Media: The media now starts writing about the “industry” and how the players stack up. The novel start-up is not so novel anymore. Phrases like “pioneer” start getting used – but the emphasis is on how the industry is forming. The novel bit is the fact that the industry is forming and evolving.
4. Investors: Most investors don’t find you interesting anymore. The mystery of the new girlfriend is over. The excitement of the unknown and the possibility of the infinite is gone. All the facets are known. It is actually easier to raise funding for a new business idea in the same field instead of building it on the platform of the current one. Investors move on to the next new girlfriend. The next “wave” occurs. But then, there are different investors who are excited about building on the existing platform.
The new girlfriend fixation has turned the ultimate goal of a new start-up into its weakness – unless you find others who are excited about the old girlfriend!
Good business is “boring”. Execution is everything. Yes, but the challenge of transitioning all stakeholders from the new girlfriend to the not-so-new girlfriend is not trivial.
Keeping the team focused on doing good business (and maybe not as exciting), keeping investors interested, keeping customers engaged and the media excited can be a challenge. But the real value is not in the novelty. The real value is in the intrinsic good business you are building.
Good business is boring. But good business is what we started out to do. It was exciting when we started because we did not know how we were going to build it – or in many cases, what we are going to build!
Deal with the “boredom”. Find excitement in doing the same thing better, faster and cheaper. Because that is where the real value is getting built. Not in the next new girlfriend.
Change the lens. Building something of value takes infinitely more work than starting something exciting. And is far more fulfilling to say “I was part of the team that built that!” – as against “We started something exciting. But we couldn’t build on it.”
Spend time in the market. Your existing customers, your teams, your partners will tell you how you are doing a wonderful job, how you are changing lives. That gives the positive energy to come up with small and big innovations, do new stuff, do the old stuff better and deliver more value.
Knowing that, over time, the new girlfriend will be a not-so-new-but-a-lot-more-wonderful girlfriend (if you are willing to work towards it), can help combine huge value creation with great satisfaction.
Real value creation takes time and hard work.
Stay with the old girlfriend.
And enjoy the ride! 🙂