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Note on Developing Start-up

Strategies
By Amar Bhide

Introduction
Avoid Land of the Living Dead
Find an effective middle ground

Decision to launch?
Viability
Not just about customers buying into the

idea
Less planning, more dynamism
Attractiveness
Low capital requirements
High margin for error
Increased Pay offs
Low exit costs
Cashing in

Armchair Reflection:
Screening Out The Losers

Armchair Reflection: Screening


Out The Losers (Contd.)
Revolutionary ventures great

creativity and exceptional


capacity to execute
Niche market less radical

concepts , some ingenuity,


capacity to make do with less
Propagatory ventures very less

creativity, superior execution

Armchair Reflection: Screening


Out The Losers (Contd.)
Ventures based on hustle in

fragmented services little


innovation required, mainly on
execution
Speculating entrepreneurs

requires foresight, execution


does not require much
managerial skill

Gauging Attractiveness
On the basis of personal viewpoint
Personal preferences determine type of

ventures undertaken:
Revolutionary ventures (desire to change the

world)
Win or lose on a grand scale

Niche ventures
Less capital, achieve financial self sufficiency faster
Must be willing to prosper in backwater
Land of the living dead

Ventures that propagate a new technology


Racing against determined rivals in a hot field
Willingness of investors to bear the risk
Odds of winning big is low

Gauging Attractiveness
Hustle ventures
Capital requirements low, working with talented

colleagues in a fast moving environment


Avoid personal risk and meddling by outside
investors
Businesses which lack a sustainable franchise
Speculators (deal makers)
Outwitting the market
Financial risks and returns depends on terms of

the deal
Liquidity or exit options

Pitfalls avoided
Timely refection to catch basic flaw in start-

up
Entrepreneur-venture fit
Common problems faced
Relying on a minor idea against

entrenched competitors
Mere operational excellence and good management

skills may not help


Launching revolutionary

products in

niche markets
Eg. Launch of Lisa and then again as Macintosh

Pitfalls avoided [contd.]


Ways to success
Identifying new opportunities
No established competitors
Need for quick action and ingenuity
Tolerant customers
Eg. New distribution channel like home shopping
Providing

superior service

Sectors that have fly-by-night operators

Possessing

native talent than mere


qualifications
Eg. In a technology dominated industry

Parsimonious Planning &


Analysis
Analytical budget for a start-up depends

various factors
External finance v/s self finance
Capital intensive
B plan required
Market research
Complex

operations or development

tasks
High cost of coordination in cross functional teams

Dynamic

external environment

Changes in technology, customer preferences,


regulations
How

to set analytical priorities??

Setting Analytical
Priorities
Concentrate on issues that can be resolved
One-size-fits-all approach doesnt work
Revolutionary Ventures
Niche Ventures
Hustle Ventures
Speculative Ventures

Issues for propagators of new technology


Rewards have to be commensurate with risks
Operational analysis

Integrating Action &


Analysis
SOP in larger companies differentiates

Analysis & Execution


Analyses Effort & Gain from new venture
For Start-ups, Action before Analysis can
help
Strategies:
Staging Task Analysis
Plugging Holes Quickly
Evangelical Investigation
Flexible Perseverance

Revolutionary
Microsoft Bill Gates
Google
Yahoo
Orkut
Sony - Walkman
Amazon. com - Online Retailing
Apple -I-Pod
Reliance petrochemicals
Infosys
Tata Nano
Federal Express
Air Deccan

Propogatory
Mastek - Ashank Desai
India infoline Nirmal Jain

Niche
Basix Vijay Mahajan
Rewa Chetan Maini
Calorie Care Cyrus Driver
Bhagirathi hatcheries Emu farming
Second shaadi.com
Antique stores
Virgin galactic space tourism
Pet saloons
JuxtConsult ( Uses internet as the medium for market
research)
http://www.juxtconsult.com/about.asp

Speculative
Oil trading
Brokerage firms
Diamond trading
Commodity trading
DLF & other large real estate organizations
Energy trading

Hustle
Naukri.com Sanjeev Bikchandani
Makemy trip. - Com Deepak Kalra
Shoe laundry- Sandeep Gajakas
Contest 2 win - Alok Kejriwal
Edelweiss Capital Rashesh Shah
Globals.inc Suhas Gopinath

Thank You