Research tells us the bumblebee can’t fly. The bumblebee doesn’t know this. So, it flies anyway!
Circa March 2016, we’ve come to be frequently posed with questions such as:
- Are we in a bubble and if yes, when will we get out?
- Are the days of defining success by building capital moats over?
- Are we back to fundamentals, positive unit economics, a path to profitability?
Many of these questions are rhetorical, yet valid. Its good to note though, there have been enough entrepreneurs busy building real businesses from the get go.
The surfeit of capital upto 2015 afforded category-leader startups more than necessary reserves and time to make a land-grab for customers, the highest brand mindshare, and the widest product distribution channels. The downside? Constant capital and attention from investors also kept them within their comfort zones.
Today’s indicators point to a real-time scenario where entrepreneurs are having to dig deep, roll up their sleeves and go back to “building companies” – not always with the surety of capital-as-best-friend. This core tenet ties straight into Blume’s philosophy for our new Fund II – if a founding team banks mainly on its ability to raise capital is its main and biggest key differentiator, we believe this isn’t sustainable.
This piece is centered around a vital trait for entrepreneurs to survive, even thrive, in 2016 and beyond.
Enter – the Resilient Entrepreneur
The biggest predictor of massive success vs. minor success among founders: years and years of relentless determination –
Sam Altman, Partner at Y-Combinator
Lets look briefly at some examples – starting with Angry Birds, a global gaming phenomenon we’re all so familiar with, as narrated by one of its founders –
“We had done 50 games before Angry Birds. We knew we were able to make the best games in the world, but the problem was that you had to do loads of versions to support all the different handsets. So our R&D time and overheads were getting worse. Rovio needed a solution and the iPhone provided one. It had learnt a lot from the triumphs and failures of its past games. Rovio was perfectly positioned to take advantage”.
Angry Birds saw the founders iteratively improving each game – all 50 of them, in close succession. There was literally no short cut to that magical “best game” – it required tremendous resilience of their founders to stay the course, yet iteratively learn, tweak and continuously improve product.
In his own way and more recently, Travis Kalanick, Founder & CEO, Uber has famously popularized this core trait by his trademarked #alwaysbejugaading. No one would argue Travis is easily one of the most resilient founders around today (taking on taxi unions from Montreal to Milan to Mumbai, with many baying for his life!).
Resilience doesn’t mean stubbornness or staying the course regardless of market dynamics.
A resilient entrepreneur can flex like a bamboo tree, rather than be transfixed and unable to move like a banyan tree.
An example closer to home – arguably recognized as one of India’s better angel-funded stories, InMobi was first born as mKhoj (“mobile search” in Hindi), a local mobile-search engine tool helping users locate services & product. Resilient entrepreneurs the four co founders were, they were able to harness market winds and pivot to become today the world’s largest independent platform powering mobile ads.
Fast No’s
The topic isn’t restricted to just founders, but even fund managers like us. I remember asking a seasoned PE fund manager about his gyan for “success”, just as we were in our early days starting up Blume. His answer was revealing – “you’d think my pitch would always be convincing right? Well, let me tell you, of an average of 10 times I’ve pitched my fund to investors, I’ve perhaps been thrown out of the room 8 or 9 times!”. I recall listening incredulously – it simply brought out the resilience of this fund manager, who stuck it out, trekked on and today manages a $2 Billion+ AUM pool. This resilient fund manager actively sought out fast no’s – asking for candid feedback, then tweaking his pitch to focus on the top investors-worth-converting.
Jim Collins, famed professor of Entrepreneurship at the Stanford Graduate School of Business (GSB) [also the author of the best-selling Good to Great and an expert rock-climber], succinctly describes how resilient entrepreneurs constantly push the envelope:
“If you don’t Stretch, You won’t know Where the Edge Is”
Resilience and 2016
The absence of easy availability of capital moats is forcing entrepreneurs toward embracing frugality, creativity, innovation, to stay resilient if they are to tide over a prolonged winter. If I were to highlight a few essential behavioral actions imbibing resilience – in the real and present context of India-tech today, they may go something like this –
#1 Stretch your reserves into 2017
You’ve likely heard this, likely several times – from your angels, VCs or if you’ve bootstrapped so far, you’re figuring this out yourselves. We’re advising our portfolio companies to look at a 15-18 month runway – 6-9 months of reserves won’t cut it any more. Build well into 2017.
#2 Make your best customers your best friends
In many cases, entrepreneurs have spent more time chasing investors for successive funding rounds than building and growing a loyal, sticky customer base. Quickly figure out who the 20% of users are that matter, and devote a disproportionate amount of time to serving them and growing share of wallet. That simple back cover of Businessweek that proclaims “Over half of Fortune 500 companies run on SAP (or Oracle)” makes a stand out statement – for good reason.
#3 Look for Fast No’s, Tweak and Move on
If your customer, business partner, investor, or key hire you’re trying to onboard doesn’t give a slam-dunk yes, then seek and ask for the immediate next best thing – the underrated, Fast No. It will save everyone (most of you’ll you!) time, money and let you sleep (a bit) more.
#4 Welcome Bravehearts and (Constructive) Critics
Even in normal times, as board members and advisors we often (and deliberately) choose to skim over what’s working well – instead, focusing our time to try and point founders toward key challenges and flags. These are not normal times anymore, and thus, there should be a renewed call for people not afraid to push the company out of sticky situations. As Mark Zuckerberg likes to say “you don’t have to get all things right. You just have to get a few, very big things right”. Bravehearts are welcome – and can help exactly in those pivotal moments.
Never Tell Me the Odds (‘NTMO’)
Caveats and Credits – borrowed from our Blume Day 2016, where this slogan was a central overarching theme. The genesis lies in a famous Star Wars quote by the quintessential rebel fighter Han Solo from in The Empire Strikes Back.
‘NTMO’ describes the relentlessness of the Jedi and their supporting Rebel Resistance crew so well. Very few movie characters can better sum up the spirit of resilience than Han Solo and Luke Skywalker, as they battle against the odds in their quest to overcome the Dark Side!
2016 calls for the rise of the resilient entrepreneur….
Will you be one?
blumeventures.wordpress.com 
Great post Sanjay. I look forward to many more from you.
As an aside, if this is true “Research tells us the bumblebee can’t fly,” then we need to get better research 🙂
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The #1 (Stretch your reserves into 2017) resonates with me personally. We’re one year into Dryfta (all-inclusive event management platform) and self-funded. Reducing burn rate and stretching the runway into 2017 is what we need to do.
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Nice post. In my work I come across mostly two extremes of people. First, those who have bootstrapped to a fault, and I’m largely guilty of that myself, or are unable to raise funds because their venture, no matter how useful to humanity, does not tick the boxes. At the other extreme are those those who have hired 100 where 10 could do the work. The former – in as much resilience they’ve built over time – are reaching their yield strength. As for the latter, the forgiven, or worse, built-in, inefficiencies are like dropping salt into the wounds of the resilient entrepreneur.
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