“Startup = Growth” Or “Startup = A Research Scientist”

“Because the world needs more Awesome, the world needs more Startups.”- Hugh Macleod

After months, I am here to share a story of a startup. The germinating seed for this story I found in Paul Graham’s essay “Startup = Growth“. Thank you Paul for your in-depth, insightful and illuminating Essays. All those have been one of my best “learning” references.

But, this time I beg to differ you, Dear Paul. This time your essay has many loopholes from a Startup viewpoint. The essay, in essence, has been written from an investor’s mindset. And,  it has also been written from the perspective of those startups, who eventually become “Big”.

Don’t you think with such propositions, somewhere you are squeezing the concept of being a startup.

For most of us, fledgling startups, a startup is an organization formed to search for a repeatable and scalable business model. And somewhat same view echoed by  Eric Ries, author ” Lean Startup“,  “A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty.”

Startups exist to learn how to build a sustainable business. The learning can be validated scientifically by running frequent experiments.  “No idea for a new growth business ever comes fully shaped. When it emerges, it’s half-baked, and it then goes through a process of becoming fully shaped,”  says Clayton Christensen, Harvard Business School professor and author “The Innovator’s Dilemma“.

How to Start a Startup?

For incipient entrepreneurs like us, this concept of startup makes sense.  Paul, even you taught me that ” the way to do really big things seems to be to start with deceptively small things.”

Taking a cue from you, I, too, have started with deceptively small things . For example, in our case, empirically, we have started with Knowledge Empowered, with the purpose of making it a preferred destination of the multitudes of Learners, Educators, Professionals and Technologists particularly in India and across the globe seeking information on education, online learning, distance learning , online courses, career options, innovations, technologies, tools and software available in the education and career domains.  Knowledge Empowered was launched in April 14, 2012.

After assessing our capabilities and much deliberations , we eventually found an almost verdant field and developed a site, EKALAVVYA, an Online Learning Platform For young boys and girls preparing for various competitive examinations in India. It provides a balanced outlook, in-depth and insightful information towards General Studies and Current Affairs for competitive exams. Ekalavvya was launched in July, 2012. Since it helps competition oriented youth to spend less time looking for news, information, views and analysis, and more time using them for their career and competitive goals, Ekalavvya has started getting good traction among its community of aspirants for various Public Service Commissions (Union and State levels) PSUs and Banks examinations.

And barely 3 months after the launch of  Ekalavvya, we have launched IASpireD on June 29, 2012, an Online Learning Socially Driven platform that offers Online Courses and Digital Content Products for competitive examinations.

To us, it’s seemingly a  disruptive innovation, a technologically simple innovation, that will take root in a tier of the market that is unattractive to the established leaders in an industry since IASpireD presently doesn’t cater to IITs and Medicals exams, keeping in mind our limited capabilities and resource crunch. Surely, we are going to  provide simple and inexpensive web information products that will  enable a new bevy of  customers to begin participating in the market.

Startup With a MVP!

In present shape, IASpireD is an apt example of Minimum Viable Product (MVP); an innovation that re- purposes an existing technology (online learning) for a new use (competitive exams in India) and brings a product or service to a previously undeserved set of customers.

It is apt to have a look at the MVP of IASpireD:

At this stage, we don’t say that we are fully shaped, but yes, through constant adjustments with a steering wheel called the Build-Measure-Learn feedback loop, we have developed a revenue model, which is, of course, repeatable. We have found some ways to make money, but for every success there are far too many failures. And, therefore, we keep our fingers crossed.

Paul, I do agree that a ” startup is a company designed to grow fast”,  but I beg to differ you when you say  ” To grow rapidly, you need to make something you can sell to a big market.”

However, it is not universally true that large markets represent the biggest growth opportunities, dear Paul. Discussing “Disruptive Technologies versus Rational Investments”, Clayton writes in ” The Innovator’s Dilemma” that investing aggressively in disruptive technology is not a rational financial decision for established companies, and that may be true for ROI-driven Investor community as well, as you said the ” test of any investment is the ratio of return to risk”.

This is  definitely one of core venture capital activities, but what about entrepreneurship and startup culture. Investment is one critical aspect of startup survival, but the nurturing and thriving global startup movement is more important.  All the stake holders should work towards creating a genuine entrepreneurial ecosystem.

Is It ‘Growth’ or ‘Solution To a Problem’ More Important?

You have rightly said the  ” combination of founders, investors, and acquirers forms a natural ecosystem” But to understand startups, understand growth can be important for VCs community. Clayton is absolutely right when he says that” what’s really important is understanding the job that customers are trying to accomplish, and only once an entrepreneur truly understands the need that a product or service fulfills for the buyer can they optimize their business or product.”

So, it is not Growth for which startups usually work; startups work either for optimizing the available solution or disrupting the available technologies. Paul, you too  have rightly reminisced,  “Steve Wozniak’s problem was that he wanted his own computer. That was an unusual problem to have in 1975… And the problem he solved for himself became one that Apple solved for millions of people in the coming years. But by the time it was obvious to ordinary people that this was a big market, Apple was already established.

But Wozniak or Steve Jobs , in his startup years, wouldn’t have thought of ratio of return. Rate of Return can be a critically important factor from Investment point of view. But, it is the Solution to a problem that becomes a  startup’s major goal. So, Wozniak’s personal computing is more a problem-driven innovation. And, to your dismay, even the industry leaders, leading customers  let alone ordinary people couldn’t fathom the progress of  technologically much simpler desktop personal computing.  And,” IBM and Apple lagged five years behind the leaders in bringing portable computers to market” ( Source: The Innovator’s Dilemma)

Why Not Start With the Most Potential?

Coming to one of your propositions that “If you’re going to start a company, why not start the type with the most potential? The catch is that this is a (fairly) efficient market.” And then you write, “But at the moment when successful startups get started, much of the innovation is unconscious.”

Could you please clarify what a startup should actually do: Start the most potential? or, Look for some innovative solution?. Rarely, it can be both.

Paul you taught me ” Most expect founders to walk in with a clear plan for the future, and judge them based on that. Few consciously realize that in the biggest successes there is the least correlation between the initial plan and what the startup eventually becomes.”

It is better if startups should be left to understands the need that a product or service fulfills, and rests all  including Growth should be  left to be taken care by other stakeholders of “natural ecosystem”. Indeed, we, startups, need a robust ecosystem to fuel innovation, R&D that hopefully trigger entrepreneurship.

Startup: A Research Scientist?

Sorry Paul that I couldn’t agree to you on many points but I feel completely in sync with your concluding remarks:

” Starting a startup is thus very much like deciding to be a research scientist: you’re not committing to solve any specific problem; you don’t know for sure which problems are soluble; but you’re committing to try to discover something no one knew before. A startup founder is in effect an economic research scientist. Most don’t discover anything that remarkable, but some discover relativity.”

Shall I conclude it  with your remark?

The popular image of the visionary is someone with a clear view of the future, but empirically it may be better to have a blurry one.