From Burn to Lean: A First- Hand Retrospective on the Cockroach Approach to Startup Survival

A few weeks back, I was invited to a collaborative talk on building lean startups that are self-sustainable and independent of investor funding.  

I took this as an opportunity to reflect on Exotel’s journey that started from a dingy, windowless room. At the time, our clientele included other excited but penniless entrepreneurs also sitting in dingy, windowless rooms, many of whom have grown as we grew. On the way to becoming one of the leaders in Cloud telephony in South-Asia, I reckon that we have learnt a few things that helped us not just survive- but thrive.

Here is a quick lowdown on the most important reflections:

1. Money is nice, but it is just ONE of the moats:

Money is a great thing to have and burning money is good, but only if it used wisely. In all other cases, it only leads to more waste.

Unless you are a market leader already, chances are you don’t have very deep pockets. Most startups do not have the luxury of the money-moat and typically find themselves in the typical David Vs. Goliath scenario.

The only way to win is to build other kinds of sustainable and reliable moats.

The other powerful moat is differentiation. Differentiation can manifest as the first-mover advantage, or thought- leadership or a massively disruptive product. The more thought goes into this aspect of differentiation, the more powerful this moat becomes against money.

2. Clear your business priorities and then be ruthlessly selfish about them:

Becoming an entrepreneur is already a disruption in someone’s life. Too often, along the journey entrepreneurs run the risk of losing sight of their goals and vision. It is important that the founders sit together and make up their minds on what it is that they are going after.

For example: Making quick money is a very different goal than making a great product. Both goals are equally valid but will require different strategies on resource allocation, distribution and setting priorities.

Once the priorities are established, and roles are distributed appropriately, it requires conscious commitment and constant effort to put the company’s interests above your own.

More than once, entrepreneurs may find themselves in situations where they have deviated from the direction originally envisioned. A critical review of wasteful products, processes, time, distractions can help bring the company back on its original track- in a lean manner.

3. Ride on Trust for faster (and better) decisions:

At the surface of it, using extensive data to make major decisions might look like the right thing to do. However, trust trumps everything else for good decisions. When people support your decisions, it means there is a high level of implicit trust.

As counterintuitive as it may seem, it is not data deficit at play in situations where meetings stretch out repeatedly, and decisions are put off indefinitely. It means you are facing a trust deficit. It is a good indicator to go back, work on the trust problem and fix it.

Once people in the company trust each other, the need for long meetings and presentations gets obviated. This is especially critical for a startup since time is the biggest asset for most startups. Surround yourself with people you trust and be worthy of their trust.

4. Find solutions that work – quickly:

Often, the starting point for a startup is to find out what works and discard what doesn’t. Since they do not have the luxury of time or money,  it is paramount to do this quickly.

There are 2 ways to do this:

Scratch your own itch:

Exotel emerged out of a solution I built to manage a startup I had built prior to this. I needed it, there was nothing I could buy off the shelf, so I built it myself. In cases like this, you know exactly what problem you are addressing and the solution that will resolve it.

Quickly learn from trends happening elsewhere:

Another way to stay on top of the “What’s working” pile is to follow and respond to trends elsewhere in the world. Picking up on those cues helps you keep your products relevant.

Real enterprises will likely be a combination of both. The right product is often built upon your own frustration to fill the gaps, and leveraging the guides from around the world.  Once these two elements are in place, it is time for your customer’s(sometimes brutally honest) reviews to make their way into your product iterations.

5. Market and product testing is a continuous process:

Intuitively, most startups begin with market testing and product fit analysis. However, I think it is a continuous process, and it is worthwhile to use some indicators to prompt you to go back to the market.

Two of the strongest indicators are:

• When your growth slows
• When unused product features surface

As with everything else, is it important for your people to be aligned with the market vision as well? It is a good idea to re-evaluate relationships that do not align with your market vision.  

6. Maximising resource utilisation while minimising capital expenses:

Undoubtedly, the best way to maximise your resource utilisation is to have people that are excited to be working on your team. Enthusiastic people do great work. They deliver on the vision.

One of the better ways to track your vision is to break them up into smaller plans and goals and track work against those goals. Building an aligned metric for productivity against those plans is a great way to keep from sidestepping on your vision.

However, I think of these productivity metrics as useful but lagging indicators. The leading indicator is always the excitement your people bring in.

7. Invest in building culture:

Usually, disruption is spoken about in terms of ‘market disruption.’ However, truly disruptive attitude radiates into other areas of your organisation- hiring, pricing, process. Great products are not created with just two or three people obsessing over it; they happen when the desire for great work is absorbed into the company fabric. The culture of disruption needs deliberate work from the get-go.

8. Going lean applies to everything, and that includes your vision:

A few years ago, I was a person who tracked many different things. Maybe it was the fact that so much was happening around me, or that different people were doing different things, I got lured into the web of metrics and measurement. Today, I track only the absolute essentials that align against my critical goals that measure up against my vision.

Often, lean trickles from the top, and really, what can be higher than your vision?