Panel Discussion 2: Follow your Heart (Was Why do 90% of Startups Fail?)

"An entrepreneur fails only when he thinks he's failing"... Kaushik Mukherjee kicked off the panel discussion with a topic that's got everyone excited: "Why do 90% of all startups fail?". (Kaushik is a final-year student at IIM-A and is launching his new venture, loot-street.com shortly)

Prabhat Garg (of Inventiv Technologies) offers an optimistic view "90% of startups don't fail." (Yaay!) "It's just that 90% of ideas presented to VCs don't survive (for long)" (Huh?)

Krishna clarifies "Start a business for the value it provides... not just something which would look good on a VC's portfolio. VCs are typically bad judges of ideas that are truly ground-breaking.".

Prabhat chips in on the VC mentality: "Trends... VCs are great at spotting trends. If you don't fit a trend, though, you'll find it hard to please VCs." There's considerable talk on the VC standpoint of making 5x returns in 5 years. "It's like BITS Pilani, ... investment is a highly competitive environment. You come to BITS being a topper all your life, and then realize that you are ID number 600...If you can get a top-class VC backing you, you must be really, really good"

(Note to non-BITSians: BITS Pilani gives students ID numbers based on their score in an entrance exam)

So, what makes the 10% of the companies stand out?

Opinions vary. "You are out there only to have fun... If you stop having fun, you stop innovating", says Manish Dhingra of Techkriti, "You need to be people-centric. We started something called 'Tech Innovate Day' every week... and the results were wonderful. It was surprising: after working all day, people still had the energy to innovate.", he added.

Identifying a market need is important too. "We realized that HR departments in most companies were highly inefficient. There was lots of room to innovate. If you have something of value to offer, it's hard to fail", said Krishna.

"We like to set ourselves exceptionally hard challenges.... just one day before the portal launch, we realized there wasn't enough innovation in our ideas.... And then we came up with a first-of-its-kind concept called 'On-Demand-Retail'. It took a lot of gumption to stall the launch for a week so that we could implement our concept", offers Prabhat Garg (of autsun.com, which incidentally means "anything under the sun". A tall challenge in itself)

Audience question: "How do you succeed in a market where mistakes are costly?"

Manish Garg: "Get it right the first time" That was obvious, I'll say. But oh, there's more. "Subsequently, when you have the customer's trust, people are more forgiving. If you sc*** up, people are going to get angry. But there's always an opportunity to make amends. You have to grab that", Prabhat adds.

Damn... I missed a joke. Live blogging is challenging! :)

Back to topic:

Prabhat: "People leave you when they don't see your vision, or they don't share your perseverence.... You can always entice with stock options, but that's useless to someone who doesn't see your vision. Getting the right employees is crucial. People who really believe will stick, and those are the people you should be bothered about" (Emphasis mine)

Prof Arya Kumar makes a point "Over financing kills more startups than under-finance. Having less makes you innovate more."

Ajay Chturvedi (VP, Citibank) chips in too "Laloo Prasad compares the railways to a cow -- if you don't milk it enough, the cow will fall sick. But there's a point he has: I'd never heard of operating ratios in a Railway budget before! You can innovate anywhere: even in the Railways! You just have to follow your heart" (Emphasis mine again)