Vijay Anand | The Startup Guy.

The Unmistakable Trait of a Kick-ass Startup

Posted on: March 21, 2008

“Every act of creation is first of all an act of destruction.” — Pablo Picasso

What is it that makes a great startup? It’s a question that I have been pondering over for sometime now actually and I thought I’d start a conversation around the same. So What makes a startup great? Is it It’s rate of growth? The team? The market? or the amount of funds that its able to raise? Hmm.. Possibly none of the above.

Let me cite you a couple of great examples and let’s draw the parallels from there.

Case #1: The telecom world has been known for skimming the market. While technically the cost of landing a call across the globe was quite insignificant, most operators have charged ridiculous prices for one simple reason – there were no other options. With having no options came the fact that they can price calls at the tags that they want to, and the public innocently was willing to pay for it. All went on as normal till the internet boomed and high speed internet became a reality, and Voice over IP (VoIP) was born. As much as there were a lot of initial attempts (even microsoft and yahoo tried internet telephony and discontinued), the fact that most of the world was yet not on broadband didn’t help the cause at all. Then along came skype with its compression codec which worked on narrowband connections, the way they democratized (decentralized) access and limitations, and the rules of the game were forever changed.

As the story goes, the founders didn’t start with skype, but with Kazaa, which did the same thing for internet file sharing. Kazzaa did for file sharing what Napster started with for music sharing within intranets

Case #2: Before the telecom revolution happened in India, the cost of a telephone line was close to Rs. 10,000. There was a man who had the vision, the drive and the determination to make sure that that cost was sub Rs. 500. Sounds very crazy doesnt it? But it happened, and thats how the TeNeT Group was formed, and thats one of the greatest momentum on which it rides till this day.

Case #3: There was once a time when searching for anything on the internet meant a lot of pain. The closest you will get to anything will be loads and loads of adult websites, which had covered just about every meta tag under the sun and were the default results no matter what you were looking for. Search for your mother’s favorite dessert recipe and you know what you’d get. Then came dogpile, and within the undercurrents came a company which just blew your mind away with the accuracy of information it got to you. Just when most of us, had given up hope of digging out anything useful out of the internet, Google helped make sense of the oodles of information that the cyberworld was churning up.

Case #4: There was once a time when people thought that four wheeler drives were meant only for the highly rich. Ratan Tata took to new levels what Henry Ford started off, with his vision and in delivering on his word, the Tata Nano.

I think we have enough to start with. Can you see the commonality that runs between all these cases. If I have to pick a word for it, I’d choose “controversy”. These are all essentially and rightly so, companies, teams and ideas that challenged the norm.

There was once a wise man who advised me that it was okay to be considered controversial. It’s not a crime, actually a compliment and a pride for an entrepreneur to be controversial. If you are an entrepreneur and you are not controversial, it just means you are just another one of the same – nothing more than wasting everyone’s breathe in the ecosystem. In other words, there is a remote chance that you are actually breaking new ground, when you are controversial.

There is also another reason why I think this makes a lot of sense. When you are starting off with a new company, and with a revolutionary mission in mind (assuming that you do want to break some new ground), it is absolutely essential that you polarize people. There will always be people who will love you and those who hate you no matter what. But the only choice you have is to ensure that there are not many people who are indifferent about what you do. You want to make sure that people choose a side, whether loving or hating your idea for whatever reason it is, and from time to time even swing sides. That’s what a “Buzz” really is all about. If you have that going for you, you are going to have no problems in having people spinning around you, in your new world.

So coming back to our original question, What makes a great Startup? I think it starts off with the vision itself. And the vision of course is something that is grown on the fertile soil of the founders’ imaginations. A great startup is one that changes the rules of the game – and what most refer to as disrupting markets. Not all technology disruptions necessarily disrupt markets and lifestyle as well. But there’s the magic that an entrepreneur brings in and one that differentiates him from a pure scientist.

As per the new economy, free is no longer controversial. It’s actually the norm these days. Discounts and free are words that people have heard and demand for no apparent reason. “Free” has cheapened a lot of services. It is also made possible by the various other laws and economic conditions that make it happen, but might not be something that will go on for long. The “Free” marketing strategy (started off by Gillette) is one of the several marketing strategies, not THE only marketing strategy.

Let me ask. If there is something that everybody keeps saying cant be done, there is probably a good chance that it can be proven otherwise. Does it come close to the where you are standing and aiming for right now?

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15 Responses to "The Unmistakable Trait of a Kick-ass Startup"

it’s a sheer coincidence that I was reading about the TeNeT group yesterday morning and was quite impressed with it. I’m actually planning to post on these lines too.

A few other traits off the top –

a) a well worked idea with clear USP built on optimal market need;

b) adequacy of startup resources – human and financial. Founders well connected with suppliers, service providers and customers. No need for external investment up until scale up stage (meaning low dilution and higher valuation);

c) Robust platforms. Agile and iterative processes that signal a wrong turn or excessive burn rates;

d) considerable location advantages – Tax exemptions, capital subsidy from government, access to research institutions, knowledge groups, proximity to large customers, low cost real estate.

e) early customer involvement at the development stage itself.

f) Perseverance in the face of serial challenges. Cool temperament.

Good read Vijay,

Enjoyed it. I think the key is path-breaking, changing the way a person would do a regular ‘day to day’ task in most cases. In the examples you have quoted, search and voip, this is very clear, the volumes are great.

Sometimes, entrepreneurs fall into the trap of creating products which do not reach out to that critical mass. If enough people are not using it, the buzz can just not set in…

Hear, hear. Excellent article. I agree. Shake up the world, and you can catch what’s in the air πŸ™‚ Thanks for the good words.

[…] The Unmistakable Trait of a Kick-ass Startup What is it that makes a great startup? It’s a question that I have been pondering over for sometime now actually […] […]

Here’s my two bits…

*what makes for a great startup? possibly scale (user adoption) and followed by the ability to monetize efficiently. a lot of startups that want to change the rules of the game do not succeed, the companies that follow them may some time reap the fruits of the original startup’s hard work (google did not invent search, facebook was not the first social networking site)

*may i suggest disruption as an alternative to ‘controversy’. clearly google was not controversial up until recently. all the examples you mention reek of disrupting previous models.
*talking about free, chris anderson (of the Long Tail fame) writes about the new freenomics era at wired – http://www.wired.com/techbiz/it/magazine/16-03/ff_free

Overall, a well penned piece πŸ™‚

Nelson, Great feedback.

But I think I covered your point as “A great startup is one that changes the rules of the game – and what most refer to as disrupting markets. Not all technology disruptions necessarily disrupt markets and lifestyle as well. But there’s the magic that an entrepreneur brings in and one that differentiates him from a pure scientist.”

So Yep, do agree that a kick-ass startup will disrupt the way things are done, and ofcourse that wont happen unless the market adopts it. Sitting at home thinking about a teleporting device doesnt help nor change anything πŸ™‚

PS: Heard About Chris’ New book FREE and read that article. Thanks though.

[…] atleast the bare minimum criteria that I just spoke about. If you are a startup that posesses the trait of a being a kick-ass startup, we’d like to hear from you. […]

[…] atleast the bare minimum criteria that I just spoke about. If you are a startup that posesses the trait of a being a kick-ass startup, we’d like to hear from you. […]

Good one. One point to be added is Passion and Determination of th team which visualizes and implements the processes. Sometimes, it is required more than anything else. “Controversy” may not be the right fit, but is still interesting.

Manoj: If you are crazy enough to be controversial, passion and determination would automatically follow. It has to!

[…] change. Once you understand this basis of markets, then things become a bit more clear as to why everyone keeps insisting on ideas that change the world. Unless there is a compelling case to break escape velocity, every idea will […]

Good read! To me personally, a startup needs to have a strong purpose, whilst being disruptive. I read a very interesting book called “Mavericks at Work”. Check it out.

Sahil, that’s a great book actually. And you are possibly right, as Guy Kawasaki puts it ‘Purpose’ is one of the key things for the existence of a startup. I am sure even NGOs have a purpose, but what makes a great startup was the question.

[…] The more I think about it, the more it makes sense. Think about it. Employee productivity is at around 4% right now. I could put some ruppee figures on it and say, if you invest 100 Rs on an employee, you get a product which is enhanced with a value of Rs 4. That’s ridiculously inefficient. And this output is for mammoth corporates. Can a startup really afford such inefficiencies and spend most of its time acting like training agents, than companies that are building dazzling products? […]

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