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Ravi Kiran
I help ambitious businesses in Middle India scale. Rapidly and properly.

Importance of Staying On: What start-ups in big cities can learn from businesses in Middle India

I meet two very different kinds of entrepreneurs and firms these days.

In Middle India, I meet promoters who have built a business over a decade or longer to come to a sustainable mid-scale position, very often in partnership with family members or extended family members and sometimes all alone. Their business today has a turnover of multiple of tens of crore rupees and has created dozens of jobs. The promoter has a decent life, has a nice house and a few cars, and is actively involved in some sort of a local association.

In big cities, I meet people who have an idea or have just started a business, quite often straight out of college or after a few years of working. These people want to build a business, along with some friends from college or ex-colleagues and are often looking for some seed funding to get started and build some traction in business. Many of them have a sincere goal of solving a customer pain, building a scalable business and creating value for the team and for the society.

There’s no doubt that we need both types of businesses and entrepreneurs, but there’s a statistic that I often hear with respect to start-ups [mostly in big cities] that gets me thinking – that over 95% starts-ups shut shop within 30 months of starting. Now, I am not sure where this number came from and whether this is a researched and verified statistic, or even whether this is accurate, but the fact that many people seem to believe in it, is good enough from the point of view of food for thought. While I haven’t heard a similar statistic in Middle India, something tells me the number is much smaller.

What is it that makes start-up promoters in big cities [which is perhaps where our new age start-up activity is concentrated] shut down a business they started with some much dreams in their eyes only a few quarters, sometimes, months ago?

While there may be many reasons [including that’s the nature of business, I am told], I cannot help but contrast the two types of entrepreneurs on one dimension of promoter approach to the enterprise.

The three most exciting events in the big-city start-up promoter’s life appears to be starting-up, raising funds and exiting. This is what a lot of start-up and VC media write about and a lot of people in the start-up ecosystem talk about. Many start-ups look at the Silicon Valley as a role model and fondly refer to it simply as ‘the valley’. They have been tutored to make ‘elevator pitches’, think of various types of the ‘addressable market’, create a ‘plan B’, learn to time a ‘pivot’ and provide ‘exit options’ for the investors. I am sure these are all important dimensions in business and every entrepreneur must learn about them, but sometimes I feel they are not tutored some other business basics.

One of those basics is developing an ability to ‘stay’ in business, something I find in much better supply in the entrepreneur in Middle India. The fact is starting, raising [funds] and exiting may appear glamorous and worthy of story material, but staying requires a different kind of attitude and skill. It’s a mindset and a ‘heartset’ thing, if you will.

Is it possible that the entrepreneur in Middle India and his counterpart in the big city enter business for different reasons and against different contexts? Is it that they have different support systems? Is it that they are burdened with different performance pressures, probably because of infusion of outside risk capital? Is it because when one of the founders of a business, often a friend, walks out, the others lose interest and get dejected? Or is it because the formal job market acts as a failure cushion that encourages the big city entrepreneur to both start and stop?

Whatever the reason, I feel our entrepreneurs need to learn that starting and exiting are events, while staying is a process. Events are usually exciting, processes can be drab. But it’s the staying that builds a business, no matter how important the events may be. Staying has to deal with getting customers, creating value for them, getting paid that value, hiring smart people, training and growing them and allowing them to excel, developing and managing the vendor partners, keeping an eye on rivals and how well they are creating value for the customers and many such rather ‘boring’ things. These are not start-up issues, they are business issues. A start-up cannot remain a start-up forever; it has to become a ‘business’ sooner or later.

Many young people I meet hold ‘serial entrepreneurs’ in high regard, and want to become one themselves. This means often they are thinking of exiting even before they have created a robust, sustainable business. Sometimes they sell their business to another, quite often some simply walk out, apparently out of a disagreement with other founders on the ‘strategic vision for the company’. Anyone who has exited a fledgling promoter driven business can put ‘serial entrepreneur’ status on his bio and let’s face it, it does sound quite cool to wear that label. Unfortunately, many real serial entrepreneurs I know of, have first become successful entrepreneurs, built sustainability, built teams, a strong financial base and then have decided to start something else. Moral of the story: you need to be successful first, and then try to serialise your success. Serialising ‘starting’ is not an accomplishment.

Maybe one of the other reasons why young promoters find it easy to move out of a business in our big cities or shut it down completely is our vastly amplified willingness to tolerate and indeed encourage failure? It is difficult to argue about failure’s role in teaching us important lessons in life and business, but have we come to glamorize failure and make it look cool on the bio? Are our young people thinking ‘if you don’t fail how you can call yourself an entrepreneur’? If it is true, and I hope it is not, are they being casual about business and is that why they find it difficult to stay?

My colleague Suhail Kazmi often tells us something his former boss Yes Bank’s founder and CEO Rana Kapoor used to tell his team, “Failure isn’t an option”. An entrepreneur in Jaipur, who runs a ‘modest 60 Cr’ turnover business, and who I met last year told me he tasted success by taking himself and his business to ‘a point of no return’, by selling or mortgaging, ‘everything I had’, persuading his wife to drop a meal a day, getting his younger child, a daughter, to wear re-stitched clothes of her elder brother, and making many other sacrifices, so they can all survive a bit longer and give the business a chance. That’s staying.

From Shashank Garg of InfoCepts in Nagpur, Sujoy Gupta of Samraat Group in Nashik to Harish Babu of Impresario in Kochi and dozens of other entrepreneurs in Middle India my partners and I come across, we hear of an intention and an aggressive goal to grow and create value for customers and employees, not to exit.

These are people who are building to build, not to sell. That makes them stay.

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An amazing find my friend. Young people are fascinated by the funds provided by Venture capitalists & others. they simply have a dream start a business, grow it a little then sell it off & make money...Very few % i would say eg less than 1% will continue their businesses & try to make it successful no matter what. Hiren
I agree that India is one of the world's outsourcing ginats nowadays, but I also do believe that other nations are catching up, including China, Costa Rica and the Philippines. I see this as a good thing, though; not only do companies have more choices when it comes to outsourcing their work, these countries are also given the chance to show what they can do.
Dr. Kari Appa
Dear Ravi, I read your article, very interesting. I lived in US for over 40 years working for a major aerospace industry. After retirement I thought of developing state of the wind turbines having contra rotating rotor as shown in our website wtswind.com. I started a small factory in Bangalore. But, even the csir has no interest in supporting me and the project. I have not been able to understand the reason. When there is need for energy no one is interested in supporting the green technology. do you have any suggestion as how to approach the people in India. Dr. Kari appa
Dr Kari Appa Thank you for reading this post and leaving your comment. Although I am an engineer myself, I do not possess sufficient knowledge about wind energy to make direct remark on your invention. That said, I empathize with you and would like to support in whichever way possible. Perhaps we can continue this conversation off-line?
Mr. Jignesh suthar
Dear Ravi Kiran, I impress with your article. Awesome one.
A very balanced article. Very true. Liked it very much.
Insightful article. Also tend to agree with Supreet Sharmas views. I would also suggest with the Tier 1 - Tier N comparision , you look at the comparison on the period or epoch of starting businesses. Apart from New Technology , Real Estate and business associated with plum government Contracts hardly entrepreneurs makes it mark and looks fit for the long haul in the current epoch. Traditional Traders who were previously a good money minting community and formed majority of entrepreneurs , be it in the steel business, agriculture or spare parts in manufacturing sectors are slowly going out of business as margins are decreasing as a result of the end user directly hooking up with the manufacturer after the advent of internet marketing. The next generation is hardly inclined to take such a business forward. The pre 1990s businessmen had no choice "failure is not an option" , because there were no other options as plan b , no lucrative jobs. The post 2000 entrepreneurs have always a plan B of getting into the mainstream job market. After 30 months of surviving the start up , comparisons are evident with peers who are still in the jobs and this feeling of underperformance drives them either to quit entrepreneurship alltogether or changing the line of business . The different epochs have bestowed upon different environments for the entrepreneurs and they are reacting to it accordingly.
Very true sir. lot many people focus on exit multiple once they get a start-up idea rather then thinking about business model and how to grow its size. IF you starting a business then why you thinking of exiting it. A person thinks of exiting only if he finds himself lack of executing and scaling capabilities.
Found the nice blog post by GrowVC COO Marcus Lampinen. Worth reading. http://tinyurl.com/7m4j4v5
Interesting , however a bit simplistic As Supreet Sharma has indicated , ignores one of the biggest realities in Indian business, namely background ..( which means usually caste) In Middle India, most businesses are( usually) traditional bania businesses done by people who come from a business family. They have lots of support in terms of knowledge , money and networks. And the risk taking mentality, which Banias have more than others. (Two of the names which you have mentioned are banias BTW) However in large cities , most startup guys would probably come from a diverse background, many don't come from a business background,some are professionals , kids of government employees. For them entrepreneurship is another option, not a way of life. They probably do more riskier stuff as well
Dear Ravi, I think the difference is also in terms of new age businesses and old economy businesses - I work with mid size industrial businesses and the desire to exit is very visible in the new generation taking over for various reasons - scale required, technology evolution, lack of capability to build an organisation - so the first generation and the sons/ daughters think very differently
Deepak Shenoy
I've seen love marriages and I've seen arranged marriages. It seems statistics shows that 20% of love marriages end in divorce, whereas only 10% of arranged marriages do. People in love marriages seem to want to "exit" their marriages much earlier, because they don't try hard enough. People in arranged marriages, though, stay longer because even when it is simply not working out, they have the feeling that failure is not an option, and they will stay together, unhappy, passing on their misery to their children, fighting, not talking, but god forbid they ever use the word "divorce". You could make that case. It's the same with startups. There are startups that deserve a longer chance, and there are startups that don't. The service startups that you see today better make sense in a few years, otherwise you end up with something where you're running just to stay in the same place, and that's even worse than dying because it doesn't end. You could give a business 10 years and watch it just about make ends meet, or you could walk out and start another, faster growing company. It's easy to justify staying on, and there are a lot of hero stories of those that did. What isn't apparent is those that are no longer visible - that guy who tried and tried and got his wife to eat one meal a day until she died. No one remembers him, or her. You have to stay true, but you have to stay practical. If at first you don't succeed, try, try, and try again, and then give it up and try something else. There's a fine line between brave and foolhardy.
Well said Deepak. The divorce metaphor is interesting.
Supreet Sharma
Your observation is flawed at various comparisons. 1. You have tried to compare middle India’s seasoned businesses (settled business men with families) with young startups. I myself come from a tier 3 city and from a business family, I have seen local entrepreneur shifting from one venture two other, like staring with Bakery-> ok this doesn’t work, let’s try Franchising etc. So instead compare a 2-3 year old business in India tier2/3 city with a big city Startup. The trend for a young company be in a tier2/3 city of India or a startup in Bangalore/Delhi/SV remains same. Entrepreneur tries fast, fail fast. Moves on. 2. Now talking about selling out, the mid-level business in India never get buyout offers of the kind the Internet based successful startups get. So there is no option for mid-level business to sell, hence they stick with it. 3. As is the case with sticking to a business if you look closely, you will find numerous campnies in Silicon Valley which are in a business from past 10-30 years, they are simply not hot-shots, they are still sustaining. But no big crop has any advantage of buying them out, so they continue to run the show(this is exactly the scenario with a mid-level Indian tier 2/3 city). TLDR: Big city startups & small city local biz behave in same manner, only if you compare a young company with a young one, and a seasoned with seasoned.
Thanks for your comment Supreet. Clearly, worth investigating more. I wonder what other readers think.
Just an observation on the three Middle Indian businesses I mentioned in my post though - their promoters havent done any other business to the best of my knowledge [Infocepts in 9 years, Impresario in 16 years, and Samraat Group in 13 years].
thomas xavier
Good stuff!
Interesting contrast of "Tier 1" and "Tier 2 and beyond" entrepreneurs....agree with your point of people wanting to wear the badge of failure on their sleeve with a lot of pride! I have met many of this breed in recent times. It reminds me of how the only "successful" cricketers we had in India for a long time belonged to the metros before one MSD came and changed all that!! It would be interesting to do a deep dive and understand how differently wired the entrepreneurs of middle India are....I think the environment they grow up in certainly teaches them the basic principles of fiscal discipline, which is ever so important for someone who is bootstrapping his new venture.....what else makes them tick??
Thanks Rajesh for reading this post and leaving your comment. A deep dive, I am sure will certainly unearth things we dont know yet about the Middle Indian entrepreneurs and how she is wired, if there is a hard-wiring indeed. Some people keep telling me that the entrepreneur is Middle India is no different from his big city SME counterpart, but deep down, I stay convinced that there's a difference. It's like no matter how much professional managers in India may appear similar to their Western counterparts, they are not the same in the management practices and approach. Managing a business as well as family 'frugally', may be one such difference.
Is this phenomenon got to do with a different sense of values ingrained in the mind of a small town boy or girl at a very young age of working hard and nurturing vs the big city idea of working smart and making a quick buck?
Interesting observation Amith. I have no empirical evidence, but what you say could be a possible explanation. And perhaps parental and school influence has something do with it.
Rajagopalan C
Ravi, what a radically "fresh" perspective you bring in for the urban start-up phenomenon. The point of sacrifice really struck a chord and is no different for a boot strapped entrepreneur. (They also exist in Cities) With your permission, I would like to bring in two aspects to this discussion. 1) What is at stake? - In the above two situations, for the Middle India entrepreneur it is livelihood itself which is at stake, which is why they just "have to" stay on. 2) Reason - I am guessing that when the Middle India entrepreneur starts off he / she starts with realistic short-term goals which have a degree of emotion attached to it. Scaling up happens usually later. This usually is not the case for City start-ups. Keep writing, Ravi. Regards, Rajagopalan C
Agree with you on both points, although I am sure exceptions exist and I believe our understanding of this subject may be less than complete. Many entrepreneurs in Middle have certainly not learnt how to take a cold and clinical view of their business. Whether that's a good thing or not is arguable and may be subject for another post. Thanks for your comment.
Vrisha Vasudeva
Thought Provoking. The big city picture presented above sounds very familiar.
Thanks Vrisha. Of course, we must remember that not all big city start-ups are same. Some promoters do stay and build a proper business.
pranesh sharma
Very interesting read. And it does talk about the difference in the mind set of people with different backgrounds. I think the basic difference is that people in the big cities have a backup. They have the luxury to fail. People in middle India do not have that luxury to fail. And it is inherent. It cannot be thought about before jumping into it. Also, the idea in big city is be the next big thing. Whereas the idea in middle India is to survive and get rich.
'Luxury to fail'? That's an interesting way of looking at it Pranesh. Thanks for leaving your comment.
Dear Mr. Ravi Kiran, Thanks for the informative article. Regards Suresh Kumar email@way2win.in
 
 
Ravi Kiran
As a child, I used to wonder where mosquitoes in winter hide, why fish keep swimming, how birds learn to fly and other such 'un-natural' occurrences. After a career in marketing & communications for over 20 years, building and running businesses of excellent size and in many a geography, hiring and training dozens of successful managers, I continue to be aggressively curious about beings and things.

Today, as a founding partner in Friends of Ambition, a growth advisory company three friends of mine and I started recently specifically with the aim of assisting and guiding ambitious businesses in India’s mid-sized towns [we call them Middle India] in chasing their dreams, I am curious about 1st and 2nd generation business owners in that geography. As I often find myself in cities and towns I might have only heard of just a few months ago, meet business owners there and hear their stories, dreams and challenges, I feel a sense of elation and sadness, sometimes simultaneously.

This blog is a chronicle of my experiences in Middle India - mostly gleaned from real life encounters with business owners, their influencers and well wishers.

Scaling a business is something I have been fortunate to learn firsthand, as I helped build and ran several businesses for Starcom MediaVest Group, a part of Paris based Publicis Groupe, as its CEO- South East and South Asia.
 
 
 
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March 01, 2013 14:56 pm by Hiren
An amazing find my friend. Young people are fascinated by the funds provided by Venture capitalists & others. they simply have a dream start a business, grow it a little then sell it off & make money...Very few % i would say eg less than 1% will continue their businesses & try to make it successful ...
July 17, 2012 04:31 am by Rintu
I agree that India is one of the world's outsourcing ginats nowadays, but I also do believe that other nations are catching up, including China, Costa Rica and the Philippines. I see this as a good thing, though; not only do companies have more choices when it comes to outsourcing their work, these ...
Ravi Kiran
Ravi Kiran
July 15, 2012 19:50 pm by Ravi Kiran
Dr Kari Appa Thank you for reading this post and leaving your comment. Although I am an engineer myself, I do not possess sufficient knowledge about wind energy to make direct remark on your invention. That said, I empathize with you and would like to support in whichever way possible. Perhaps we...
July 15, 2012 15:31 pm by Dr. Kari Appa
Dear Ravi, I read your article, very interesting. I lived in US for over 40 years working for a major aerospace industry. After retirement I thought of developing state of the wind turbines having contra rotating rotor as shown in our website wtswind.com. I started a small factory in Bangalore. Bu...
July 13, 2012 22:52 pm by Mr. Jignesh suthar
Dear Ravi Kiran, I impress with your article. Awesome one.