June 12, 2019
Life would be easy if one could read lessons from another entrepreneur and become successful. But life isn’t easy. There are no lessons, only scars to show for the journey.
I have spent two decades on the battlefield, let me show you some of mine.
In mid-2008, I was in a conversation with a large global media company to launch their titles online in India. As a part of the deal, the company had in principle agreed to invest 7 million dollars in the venture. The discussions on the terms and deliverables took us about four months. Finally, I was heading to London to meet the company’s chairman and sign off. To hit the ground running, I had spent a month hiring a talented editorial team that could begin work as soon as I got back. I landed in London on the second week of September 2008 to discuss the term sheet one final time. Excited about the deal which was to consummate the next day, I decided to get myself a well-deserved drink. At the bar I noticed everyone glued to the television screen watching the news. The anchor was talking about a company called Lehman Brothers. It had declared bankruptcy. I didn’t understand the impact of this event and went about my business. In a couple of hours, our next days’ meeting stood cancelled. I waited three more days in London following up. Nothing happened apart from my understanding of the consequences of that bankruptcy around the world. Soon I was back in Bombay and had to let go of the 30 people I had hired in anticipation of this new venture. Being an optimist should be a journey taken along with your inner instinct and the realities and unpredictability’s of the world. Optimism should be vigilant, not blind.
I have had a reasonably successful relationship with my co-founder at Webchutney for two decades. Though it has not been easy for either of us. It turns out; toxic co-founder relationship is one of the top 3 reasons for failures of start-ups. I have seen some of the best teams blow up failing to address early enough questions like “Who gets what?” “Who gets to decide what?” and finally “Who is the boss?”. Co-Founders usually duck these questions by handing each other titles. One gets to be CEO; the other gets to be President, in an attempt to skirt around essential issues to be dealt with in the beginning. You can’t sidestep the hard work that it takes to make a relationship work. And that is a continuous process of embracing conflict and resolving it.
In a very competitive environment, Webchutney incubated an ad network called NetworkPlay in 2008. We invested little less than half a million dollars in it when peers had raised 10s of millions of dollars. Three years later when we got an opportunity, we sold the business to Bertelsmann Group. It was a 15x return on our initial investment. If you do the math, our exit wasn’t even a fraction of the money that our peers had raised. The largest player in this space had raised over 100 Million USD. Almost everybody sniggered at us for chickening out early. Then one by one they collapsed under their weight of capital raised at those high valuations. There were no takers for most of them. We were in the same market, similar revenue than peers, ran a tight ship and were real about our expectations. NetworkPlay’s success story brings me to the next point.
I have seen this play out plenty of times; total dumb luck is a massive x-factor in whether a company makes it to the finish line. It is sad that many founders tend to gloss over this fact when talking about how they have ‘made it.’ Success is contingent on timing, hype, mentors, market dynamics, competition, A-ha moments, and many such factors. Most of these are not under the control of the founders. Not to discredit the efforts of the founding team, I would be lying if I don’t admit that the network we sold had a lot to do with dumb luck. We had tried hard to raise money for a year. Bertelsmann was one of the 50 odd suitors we had met. They went cold for a year. By 2012, we had stretched ourselves a tad too much and were staring at a massive cash flow issue. After evaluating every possible way to wriggle out of the hole, we began considering a fire sale. Then totally unexpectedly, Bertelsmann re-dialled and acquired the company. Founders mistake dumb luck with success thanks to hundreds of failures. It’s survivorship bias.
Finally, remember the 3F rule. If someone is not f—ing you, feeding you or financing you, their opinions don’t matter. There is no definitive playbook in entrepreneurship. Anyone without skin in your game isn’t exactly qualified to comment on your business. So don’t get swayed — you’ll have your own scars to show soon.
This piece was slightly edited and was published in Forbes and 10th June, 2019