WHAT I LEARNT FROM MY COMPETITOR(14)
“Focus on Unit Economics
before Going for Scale“
K Ganesh, Serial Entrepreneur and Partner, GrowthStory
CLAIM TO FAME: Started
ventures like Customer Asset and TutorVista, before selling them, giving him an
aggregated exit valuation of roughly $300 million, according to one estimate
THE LESSON: My first
entrepreneurial venture was IT&T, a third party maintenance and systems
integration company headquartered in Delhi. We used to closely follow Microland
as it was closest in business model being a systems integrator. With IT
hardware rapidly changing in terms of technology obsolescence, Microland was
consistently ahead of the curve, both when entering a new business vertical and
also exiting it at the right time. We started computer IT distribution and
reselling, networking, IT education looking at their initiatives and then as
the businesses became commoditised and they started exiting those to move to
fresher pastures , we followed suit after doing our homework. How to stay
flexible and adapt to a very changing Indian IT industry's opportunities and
challenges is something we learnt from Microland.
When we started Freshmenu
-when the food-tech industry was “flavor of the day“ and everyone with a
PowerPoint was getting funded -there was lot of pressure on looking at
companies that were getting funding and scaling by focusing on the mass market
segment. It was too tempting to see rival companies clocking up orders and,
since the price point was `100-150, potential market size was huge. But deeper
analysis showed us that this was an inherently flawed business model and would
never make money. It was a tough lesson but we persevered with a slower growth
rate but with a more solid business model with strong unit economics and repeat
rates. That stood us in good stead and we were able to raise $5 million from a
marquee investor like Lightspeed even though it took time while others who
raised seed money earlier and quicker are now struggling to survive and raise
full series A. Biggest learning here: don't go after scale but focus on unit
economics first; scaling without unit economics is like giving the microphone
to a poor singer so that lot more people can hear -it only exacerbates the
problem and does not solve anything.
(As told to Rajiv Singh)
ETM27DEC15
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