Reinhold Messner was the first person to climb Everest solo without oxygen. Years before he reached his audacious goal in 1978, he wrote an essay titled Murdering the Impossible which countered existing wisdom that it was humanly impossible. Setting big goals and thinking about a differentiated strategy is key to success. But an important question for entrepreneurs – and investors is – are all goals equal?
I would like to make the case that ideas and opportunities worth pursuing – for entrepreneurs and investors – need to be either big or different. If they are not, they should be mutated till they are. And if they can’t be made big or different, they should not be pursued unless the objective is income replacement. Of course there is nothing wrong with an income replacement business but these are often not a good fit for external investors or ambitious entrepreneurs.
Most business plans that investors view – almost 99% of them – suffer from one or a combination of three problems. Either the market is not big enough, the startup proposes only an incremental service or product or there is a solution in search of a problem. Let’s look at each in some more detail.
Most startups that raise external capital must operate in markets that are large or will become large, because even if the execution is perfect, 100% share of 1 is 1.
Entrepreneurs looking to offer an incremental variation are always passionate about their ideas and believe they can create a large company. But the question is whether consumers need the variation and will they pay for it / If yes, then why is an established player not offering this? Think facebook and google+. How long did it take for Facebook to replicate the small tweaks that google+ had? One month. The question to ask then is, is whether funding an incremental variation is the best use of an investor’s capital and an entrepreneur’s time.
Most of the founders we meet start their conversation with “We have created this technology platform, software solution or product”. Great companies are not created by thinking of the solution ahead of the problem. Look around you – be it Apple where Steve Wozniak needed a computer or Google where the founders could not locate information on the net, were created in response to a problem that needed to be solved. Or closer home, redbus was created because Phanindra Sama, the founder did not get a bus ticket to go home on a Diwali weekend. Similarly, Saumil Majmudar founded Edusports when he realised that his children did not have a proper physical education programme in school. The list could go on but scratch the surface and most big companies are created by trying to solve a problem that the founders personally felt. So the best way to get an idea for a start up is to think about the problem first and what kind of company might be able to solve the problem. And then work backwards to the solution. Don’t look at the solution first or an existing company to think of your big idea.
Have you ever wondered why Aamir Khan’s movies are special? For the same reasons that some companies become big hits and others don’t – he dares to think big and more importantly, think differently.
Despite the global doom and political traffic jam, we all live in a unique time for India. What is happening in India is not once in a decade or once in a millennium but once in the lifetime of a country. There are massive problems to be solved and this means massive entrepreneurial opportunities. Look around yourself. Find the problems that you feel for. Don’t “copy paste” –open your mind to the problems that exist around you. And look for a problem that is big or will be big. So Think Big. Think Different. Or Think again.
About the Author:
Bharati Jacob, Co-Founder of Seedfund Advisors, one of India’s leading early stage investors [The article first appeared in the Economic Times]