As a kid, I used to be quite fascinated by matchboxes. From the uncertainty of being shouted at by some elder, to how many tries it took to light it. And the best, how long could you hold a lit match without burning your fingers.
Pic source: link
Back then, the SHIP matchbox was commonplace. Though I don’t remember them having the jokes at the back of each pack. This standard pack had 50 matchsticks in it. A common problem with any matchbox is running low on striking surface towards the end. It takes more attempts to successfully strike a match.
Then, HomeLites came out with a significantly bigger matchbox. These had 300 matchsticks in it. These seemed to have a bigger problem with the striking surface. Maybe it was the longer striking surface strips on each side that led one to make longer strikes. As a result, you’d have a lot of matches left, but striking a match would become increasingly difficult. You’d spot some unused section towards the edges and try striking it there.
Pic source: link
Anyway, recently I noticed a tiny design change with their matchboxes. And I think it might just solve the striking surface problem.
What they simply did, was replace the two long striking surfaces on either side of the matchbox, with a tiny dividing strip. So instead of two long striking strips, you now have a total of four smaller strips.
If you are overly disciplined, you might restrict yourself to one striking surface at a time. Then use the next one. The rest of us will randomly strike a match against any one of the four surfaces. Point being, with the shorter striking surface, we will unconsciously limit our strike action to that stretch. Am quite sure these new boxes won’t have that old problem.
Just an example of how a simple change to the matchbox design solves a problem that might have left many puzzled. A tiny break in the striking surface alters user behaviour in the right direction. And without necessitating any complex redesigning of the matchbox itself.
If you want to know more about exactly how matches work, read on…
[source of the excerpt below: link]:
The heads of safety matches are composed of a single part. They contain antimony trisulfide, potassium chlorate, sulfur, powdered glass, inert fillers, and animal glue. They may also include a water-soluble dye. Antimony trisulfide cannot be ignited by the heat of friction, even in the presence of an oxidizing agent like potassium chlorate, and it requires another source of ignition to start the combustion. That source of ignition comes from the striking surface, which is deposited on the side of the matchbox or on the back cover of the matchbook.
The striking surface contains red phosphorus, powdered glass, and an adhesive such as gum arabic or urea formaldehyde. When a safety match is rubbed against the striking surface, the friction generates enough heat to convert a trace of the red phosphorus into white phosphorus. This immediately reacts with the potassium chlorate in the match head to produce enough heat to ignite the antimony trisulfide and start the combustion.
Soap Dispenser Design
This here is an ancient shampoo dispenser that broke last month. It was a crappy design for a few reasons. Firstly, because of how the pumps are placed (at the bottom). It would not stand on its own when you needed to refill. You either had to prop it against something, or hold it with one hand while filling it with the other. Small detail, but clearly ignored.
Secondly, it didn’t take much to take it off the base plate (2nd pic). Which is exactly how it fell and broke…because of an accidental tap that easily took it off its hooks.
Then came the replacement dispenser.
Certainly a better design. And one that stands independently. It allows refilling without risking the unit toppling over (and spilling liquid soap).
Only problem with this one is that someone did not think the back support design clearly. That side of the white panel (with the lines) should ideally have faced the wall, and the more smooth side faced forward.
Another good thing about it, is that you need to slide it the entire height of the support panel to fix in place or remove. Which means accidentally knocking it off is not easy.
Now I came across this liquid soap dispenser at a restaurant recently. It looks like any other dispenser (pic 1 below). Oddly though, it dispenses from under the black pump button (pic 2 below) and not the steel body, as one might have assumed.
Ordinarily, this dispenser design might still have been ok if it was for a single basin. You would be standing almost directly in front of it, so most likely, the soap would land somewhere on your palm. However, here, it was placed between two basins, so you would tend to limit yourself to the area in front of your basin, especially when others are around. Your hand will therefore approach the dispenser at an angle (unlike if it were right in front of you). What happens now is that when you press the pump and hold your palm under the steel body, soap will fall onto the ground from in front of your hand. Hopefully not onto anyone’s shoe.
Simply making the black button in the shape of an inverted triangle it might have made it far more evident.
If you own, manage or work at a company, and are grappling with a complex challenge or are in need of innovation for growth, get in touch. More here.
PayTM’s user interface
PayTM‘s web user interface (not sure about the mobile app), can be a little misleading.
We as users, are almost completely programmed to click the ‘Accept Terms’ checkbox on any application. Especially on a known one where we are almost at the end of an action or purchase.
Then, it seems cunning of PayTM to put this so close to the ‘Proceed to Pay’ option. We are ordinarily inclined to click accept on a ‘Terms and Conditions’ checkbox across websites.
Here, trying different purchase options, as I came to this page, the offer given in what seems like a ‘T&C’ checkbox was different. But since we pay so little attention to actual ‘T&C’ checkboxes, we could very easily select this one, only to have the price of that instantly added to your total.
Depending on the total value in your cart, you might even not realize the addition of a few hundred more bucks to the total. And before you know it, PayTM has managed to secretly sell you something by way of a sneaky design tactic.
PayATTENTION ! Don’t let brands that should be becoming increasingly responsible with growth, fool you.
If you own, manage or work at a company, and are grappling with a complex challenge or are in need of innovation for growth, get in touch. More here.
Creating and Understanding Customer Feedback
If you’ve ever ordered waffles online, most likely they’ll come in one of two kinds of packaging. One is clean like in the pic above. The other is where all of them in thin paper holders will be stuffed into a box. Quite messy.
Anyway, say you ordered a few dishes for dinner via a food ordering app from a local restaurant. packaging by the restaurant is horrible. The food has leaked into the outer bag, and slightly onto other food containers below.
However, the food itself is delicious.
Now consider you ordered from another restaurant on another night. Exceptional, airtight and impressive looking packaging.
However, the food tastes somewhere between horrible and just-average.
Now, if both restaurants, or even the food ordering service used a simple rating mechanism, chances are, both restaurants will be oblivious to what customers love and hate about them.
The first restaurant might see a bad rating and think their food sucks. The packaging quality never crossing their mind.
The other restaurant might feel proud with a high rating, assuming it was for their food, while customers struggle to consume it. Or they might think the bad rating was because of some delivery error or delay.
If you are going to take the trouble to capture user feedback, take a little more trouble to capture more detailed feedback. Because vague feedback can sometimes be more dangerous than no feedback.
Without boring the customer, try and split up your service feedback into its components. In the case of the home order, it could be the food quality, packaging quality and service delivery. For a product, it could be the effectiveness of the product (in doing the job), ease of understanding and use (instructions, design simplicity, etc.), and effectiveness of customer service (if it comes to that).
If you own, manage or work at a company, and are grappling with a complex challenge or are in need of innovation for growth, get in touch. More here.
Will Uber Disrupt Itself?
Most of you must have seen this image (or a version of it) in the last few years. I remember a lot of people sharing it or referring to it with almost a sense of pride and relief. It was almost as if the world had found a way to get the rewards without the work. I also remember using it about 2 years ago during my design thinking workshops. My objective was more about slowing down any wild imagination among participants, about creating business models without firm, underlying foundations.
Oddly, this would be the only section or slide that would find a small amount of resistance and counter-views. Apart from the losses Uber was amassing, there wasn’t much else to disprove it. Its valuation certainly fuzzied plain reasoning for many business folk.
And while the jury’s still out on the success or failure of Uber, I’ve been trying to see if there are any indicators in their drivers’ views.
On a recent Uber ride, the driver was telling me about their reducing margins. How Uber initially started with a very lucrative 15% (share of revenues Uber retained, leaving the rest for the driver partner). And how, with time, that share has increased to 20, 25, and now 28%. I also inquired about why I was often getting surge prices in the afternoons.
The driver explained that they prefer the mornings and evenings because of surge pricing. And since their revenue sharing is lower now, a lot of them go home to rest in the afternoons. A few afternoons ago, the app showed nearly half a dozen cars around me. Yet it took an hour of trying to get a confirmed booking. And the few drivers who cancelled, suspiciously called to ask where I was going, before cancelling. And recently, a few drivers have also asked how much I was being charged for the ride. Something never discussed before.
In an earlier post, I shared a story of another company before Uber, that perhaps did not have a good pulse on its different stakeholders. And how it eventually disappeared from this space in the face of Uber. By these recent signs, seems that if Uber doesn’t disrupt itself, someone soon enough might.
Where Do We Go Now?
Google’s AdSense program let’s publishers or website owners have relevant ads show up when users visit those sites. Google earns revenues (via their Google Ads – previously AdWords platform) from businesses wanting those ads showing up to relevant customer groups. In turn, they pass on some of that revenue (based on ever-changing conditions!) to the site owners for using their space for displaying ads.
Google’s all-encompassing know-how of users and their searches and interests makes all this possible and seemingly co-exist well.
A few years back, I had applied for Google AdSense for my blog. Thankfully for me, they had replied with the inability to take me into the program. According to them, my blog covered a diverse range of topics – something not suited to their business model that prefers everything in buckets. Highly specific, highly siloed topics or themes. If only humans were that basic and simple.
While probably a lot of people are aware of the underlying problem with this, it seemed to get highlighted after a recent meeting with an old friend.
This friend was telling me about how he and a friend were keen on creating a blog that shared information around good health. And so, they collaborated and got working on it. One had a tech background, and handled site development and Google services they hoped to integrate and earn from. My friend, good with content, had already researched and created several articles around the theme of their still-being-developed site.
Then, apparently this June, Google altered their AdSense program, leading popular healthcare related sites and services to see a near 50% drop in web traffic to their sites. The result. These two friends have at least temporarily shelved the project.
Imagine people with keen interest or even a passion for certain fields or topics. And their humble hope to share their knowledge with the world, and to learn from it. To connect with like-minded people in other parts of the world. To interact and grow. And perhaps be remunerated for their effort, even if moderately. These people have now often been basing their decision to continue in that field or not, based on Google’s whims.
As a kid, I once heard of how in China, the government has a say in the profession you pursued. And it was independent of your educational background. I thought it was highly illogical.
Yet here we are. Unconsciously doing the same thing in accordance with the wishes of ever-changing algorithms of a for-profit company.
My 9 Step Version of the Design Thinking Process
This post about my 9-step version of the design thinking process has been long overdue. It is already explained in my book, ‘Design the Future’, but I also wanted to share it here for those interested.
The five-step Stanford design thinking process is arguably the most popular process out there. I have however, come across numerous different processes or versions. Ranging from the 15-step Darden process that I was taught, to oversimplifications and misleading three-step processes I have come across.
In my interactions with managers, business leaders and even students, I found that while many were familiar with the Stanford or some other design thinking process, they did not quite understand it well enough. For instance, ‘empathy’ came across to them as something that is ‘just done’. Similar to how many people assume hearing is the same as listening. And seeing empathy as a step in the process gave many the impression that like a switch, it had to be turned on and then off, as one moved to the next step.
So, in an effort to simplify the design thinking process so more people may use it, I created my own version of the design thinking process based on my understanding of design thinking and experiences practicing it. I took the Stanford model, and hopefully improved it.
You need to remember that any design thinking process is a broad guideline. It is not like a military obstacle course that one must complete in a defined sequence. You might find yourself looping through a few steps multiple times. Or in some cases, depending on what the information or insight presents, you might find yourself back at the beginning; starting again with renewed understanding of the challenge.
Sherlock Holmes, in the series ‘Elementary,’ once tells Watson, “The danger with rule books, Watson, is that they offer the illusion that leading a moral life is a simple undertaking, that the world exists in black and white. Welcome to the grays.”
At least when it comes to areas such as creativity and drawing inspiration, remember there can never be stringent rules or guidelines.
My 9-step version of the design thinking process:
Of the nine steps in the process, the first three are more underlying criteria than steps. Criteria that are critical to improving the chances of success on a project. Those three criteria are Humility, Empathy, and Intention. While these might seem obvious to the point of sounding stupid, they are often the most ignored aspects to a design-led process. More on that as we understand each step better.
After that come the more common steps of most design thinking processes. They are: Define – Empathize with Intent – Redefine – Ideate – Prototype – Test
Let’s look at the nine steps more closely:
Humility – The quality of having a modest or low view of one’s importance. Its relevance springs from the simple signal versus noise perspective. Our objectives as design thinkers is to maximize our understanding of user experiences and needs. Of those we want to innovate for, or whose problems or challenges we want to solve. That is the signal that is of utmost importance to us for innovating for them. Our views, opinions, and biases are the noise.
The moment you can bring yourself down to the level of a beginner or a learner, you put yourself in the backseat, and that’s when the end user or final beneficiary of your innovation will come into the limelight of your focus. Remember to start with humility.
Empathy – The ability to understand and share the feelings of another. Putting yourself in a live user-setting and observing and/ or interacting with users to get a better sense of what a problem or future opportunity might mean to them, how they deal with it, and so on. In conjunction with humility, it offers a good environment to capture user information.
Unlike what some methods might state, empathy (and humility as well as the next step, intention) are not steps in themselves. They should not be traits that you turn on and off depending on which stage of the design thinking process you are. It is also why, along with the intent, I have placed them at the base of the six-step process, to signify how the three traits always need to be ‘ON.’
Without being in a constant state of empathy, no real innovation is possible. And that will be the difference between a real design thinker or team creating an exceptional change, and people simply practicing it as a flavour of the times.
Intention – An intention is the larger thought and nudge to action for a change, that brings you to employ the design thinking process. You might wonder what the difference is, between humility, empathy, and intent.
As a business leader, humility will always help you spot customer or employee or other stakeholder needs and concerns. Empathy will let you better understand those needs and concerns. To get to the root causes of it. You might still choose not to do anything about it, because you don’t have the intention to. Contrarily, if you have the intention, but lack humility and empathy, it would mean that your objective or goal is not the right one.
Equipped with humility and empathy, but in the absence of any intent, a business leader will always spot improvement areas in his or her business. All they need then is to choose their intention – i.e., determine the direction of their effort, and get working on it.
Define – Here, we put the problem statement or opportunity statement in words. It is a starting point of sorts, to the primary design thinking process. Before interacting with user groups, this is a step where we broadly express what we think the problem or opportunity area might be. It could be how a client has described a problem, or, if we are helping a friend or industry colleague, it could be their description of the issue.
One key thing to remember with defining a problem or opportunity is to make it sound positive, irrespective of how grave or pointless the situation might seem. A lot of companies are prone to defining/ framing what hurts first. Their definition ends up being a problem statement which sounds grim. The disadvantage of doing this is that when you invite people to think of ideas, even as part of a brainstorming exercise, a grim-sounding problem statement stifles the thinking, and will hugely limit the number and quality of views that you receive.
On the contrary, if you turn your problem statement into an opportunity statement, people ideating will be in a positive mindset, and be more attuned to think of creative ideas. Try to notice the difference of mindsets the following two statements evoke. Read them more than once if necessary:
A Problem Statement: “How can we drastically reduce our after-sales service related expenses?”
An Opportunity Statement: “How can we redefine our service arm to be more relevant to customer needs, while not proving expensive for us?”
As Abraham Maslow once said, “if all you have is a hammer, everything looks like a nail.” Defining a challenge too negatively and very precisely might give you solutions that just create more problems of their own.
Empathize with intent – This is the fun phase, where you spend time observing actual users in their natural surroundings. See how they consume a product or service. How they interact. And you must do this in the subtlest way possible, even when you are interviewing or interacting with them. Especially if the process is delicate or embarrassing for the end-user, or if the user is introverted or are in some way intimidated by you and your team’s presence.
One important thing to remember in this phase is to be subjective with the empathy, but objective with what they share with you. If you have a subjective mindset when trying to find learnings, you might tend to get lost in a problem. And depending on the type of assignment, it might leave you either in disbelief, or maybe even depressed or an emotional wreck, depending on the kind of problem you are working to solve, as users expose you to severe difficulties or bitter experiences.
Instead, empathize with users as they walk you through their journey, experiences, feelings, and thoughts. But look at it from behind a glass wall when taking notes or drawing inspiration or conclusions from it. That way, your focus is not diverted by problems but instead stays focused on noting down those problems and possible thoughts, reasons, etc., that might spring to mind. The focus will help you then work towards getting rid of the problem, as opposed to being overwhelmed by it.
Redefine – After gathering user insights, we revisit our original definition with what we have learned. After enough information has been collected in the earlier stage, the team debriefs. The information is shared amongst team members without contaminating it with their inferences. That way, each member gets a clear sense of how things presently are.
Often, when tasked with solving a problem for someone, even when we have little or no information to go with, we are eager to get started with identifying potential solutions right-away. You might have seen this tendency in yourself and others (I tend to, from time to time), where someone mentions a problem, and without stopping to understand more, you start rattling possible causes or solutions.
That happens when we go with our definition of someone else’s problem. Which is why, after an initial definition, once we get a better understanding of it from actual people facing the problem (in the ’empathize with intent’ stage), we redefine the challenge more accurately, based on what we have learnt.
Ideate – This is the stage where designers would take the information they have gathered and use it as inputs that they put through a choice of design thinking tools. Tools including the brainstorming or versions of it, to contra-logic, worst-idea, brain-writing, trigger questions, changing perspectives, etc., and then use anchors, forced combinations and connections to come up with numerous ideas. The more ideas, the better, and the crazier the ideas; even better!
Prototype – Prototyping an innovative solution is akin to shaping a solution using two pairs of hands – your design team’s, and your users’. In the previous stage, you would have identified some potential ideas and possible directions regarding a solution. This is where you need end users to help you figure out what works for them, and what does not.
The objective of this stage is to be able to move rapidly towards a final solution, with minimum investment (as far as possible) on experiments towards refining potential solutions. The moment each prototype becomes too expensive and complicated, there is a tendency to either convince yourself and your team that it is a great solution (because of the effort that went into it. It is a cognitive bias called the IKEA effect).
Another possibility is that if you encounter a roadblock at this stage, your team or the top management might get easily demotivated and consider it a colossal failure, solely because your team spent a fortune building a prototype that user groups did not like or approve of.
Instead, make the most basic and low-cost but effective prototypes possible. Use anything from sheets of paper for story-boarding, to card paper or cardboard, Styrofoam and other craft supplies to work toward a final solution. Your objective with each prototype, is to test no more than one factor or variable you need clarity on. Test too many criteria, and the learning becomes unclear.
At workshops I conduct, I sometimes take my old letterheads for participants to use for discussions, sketching, or to make things out of.
It is only when everyone finds using anything lying around them as potential material for prototypes, is when prototyping will become far more prevalent. The same goes for ideating. If the materials you use are too fancy, you or your team might use it as an excuse to delay prototyping, or even ideating.
Which is also why, while a lot of design thinking workshops use post-its and put up pictures of it, few participants continue to use post-its to implement some of the tools they learnt. Because buying post-its is expensive and sometimes inconvenient. If you can’t make do with stuff already at your desk or around, the action gets delayed till you buy those supplies. Take this from someone who uses toothpaste or soap to write on the bathroom wall so that a potential idea does not disappear with the flowing water.
Test – Once you’ve completed the prototyping phase, you move on to testing. The significant difference between the two is that while prototyping was far greyer and also, the prototypes were far less expensive but required a slight stretch of the imagination by the user, the testing phase is that much more advanced, as it is that very close to the final product or service.
And unlike checking one feature at a time in the prototyping phase, here you are testing the product or service in its entirety, towards ironing out any features or poor service extensions that exist, by letting your users directly interact with the solution.
The first rule to keep in mind in the testing phase too is that your product or service is not final or finalized yet! There would still be some assumptions that your team would need to test. For instance, it is one thing to prototype with sketches or storyboards or even pretend mobile interfaces. Quite another to have end users interact with your store layout or theme park or mobile application.
Which is why we have the testing phase, where your team would help build almost-final solutions to test them in the hands of a closed group of stakeholders. It is great to have a select list of people who will evaluate your creation. That increases the focus and feedback capturing. And what you will be testing, are any assumptions that were earlier not tested, or that sprung up along the way with the increase in clarity.
It isn’t possible to overstate the amount of valuable, even critical insights that can be gained in the testing phase.
Testing is followed by eventually launching the product, service or change – once all assumptions and user hesitations have been factored in.
After you’ve gained more realistic insights from real users who interacted with your prototypes and brought you very close to a final solution that you by way of prototypes and then running exercises with them in the testing phase, you are finally onto an almost ready and well-refined answer.
Ideally, even after launch, the journey should be looked at like it is the making of a TV series. You’ve launched season 1 or 2, and it is doing well. But you need to check-in now and then as to how viewers are reacting and engaging with it. The bigger question in your mind always is, is there enough traction to demand a season 3, and if yes, would there be any significant changes needed (replacing actors, etc.) or is the show no longer relevant to its audiences. In which case, you then need to figure out what next. That way you are not going in blind with season 3, to later find out it lost its audience midway through the previous season itself.
One should remember that there is no perfect product, service, experience or solution to user needs or problems. And there are no runaway results promised by design thinking, the way some firms guarantee the ability to create viral videos. But yes, you always have a far greater chance of arriving at a product or service that people want or need by using design thinking, than by merely guessing or troubleshooting your way through.
Is it possible to fall in love with a company?
Not the kind where you are loyal to a company or brand or product line and refuse to buy anything else.But truly revere a company because of their values.
A few weeks ago, I was at the Indian Hotels company to meet a senior gentleman there. Unlike other companies, where either an assistant or the receptionist or some peon might walk you to a meeting room, this person came to the lobby to receive me.
I’m not particularly good with small talk, and almost always jump right to the point. However, I started this meeting differently. I told this person about a story a close friend’s son had shared recently. It went like this.
Many years ago, when my friend’s son was in school, the school bus would drop him off at Kemps Corner. They lived up Altamount Road, quite a steep walk up. Especially for this stocky boy with a big schoolbag, huffing his way up the road. And every once in a way, a Mercedes car would pull up, an old gentleman sitting in the back, would offer to drop him to his building. This boy would sit in front, next to the driver.
The old gentleman would ask some questions about how he liked school, etc. One evening, this boy decided to mention to his family at dinner, that he had been occasionally getting dropped home by a complete stranger. As he narrated the story and described the old gentleman, his granny smiled and said, “that man is J. R. D. Tata!”
For the uninitiated, Mr. J. R. D. Tata is arguably one of the greatest Indian businesspersons.
What’s more, when this boy grew up and shared this story on social media, it turned out that other people who lived in the area had similar stories of their own. It seemed that success didn’t create a divide between Mr. Tata and others, but rather, Mr. Tata chose to use his success to help those around in whichever way he could.
This gentleman at the Taj Group was thrilled to hear this story, but not completely surprised. I guess the values infused into the group are so strong, it’s not something they would struggle to believe.
Rewinding a bit to a little before this meeting of mine…. I reached the Indian Hotels office a little early. Restless as always, I was walking around, admiring the picturesque view of Bombay from the window beside the reception area. I then noticed pillar-like structures just behind where the receptionists stood. There were seven on one side, six on the other. And each one had a name and number etched in. I had a faint idea about what they were. But just to confirm, I walked up and asked the receptionist about them.
And indeed, they were in memory of their brave employees they lost during the 2008 terrorist attack. The last pillar on the right just had a name on it. ‘Lucy’, and no date. Turned out it was a pet of theirs, which was always outside the hotel.
The two stories were truly humbling. Even just a few more companies with the kind of humility, respect and values that the Tata Group of companies has, could truly transform the business ecosystem.
Perhaps it therefore comes as no surprise that the brave Taj employees did not try to escape during the attack. On the contrary, many of them displayed superhuman courage and presence of mind to do the unimaginable. The kitchen staff formed human shields as their guests tried to get out.
No amount of rules, threats, salary packages or incentives can get someone to do that. It is something much more. And has to come from within, but only when the ecosystem is right. It’s something very human. Something the world needs more of.
Common problems startups face – A Design thinking outlook
I have been directly associated with startups since 2006. That’s when I started my career as a member of a venture capital investment team. All the way to my recent years consulting them and young businesses, I have heard a multitude of problems that startups face. Problems that can largely be categorized under two main causes.
The first one of course, being investments.
The second, being the lack of traction, or growth in business.
With regard the problem of funds, you could further break it up in to funds you must have, and funds that are good to have.
Literally all of us are, more often than not, influenced by awe-inspiring startup stories. About those startups in the world that seem to be on a blistering growth path. With people and funds literally queuing up for an opportunity to invest in them.
Watched the movie ‘The Incredible Hulk’? The Hulk and the Abomination in that are like those few startups that receive disproportionately high amounts of funding.
Everyone is not like them. And even in their case, of the two, only Hulk was relatively stable with the superpower. The Abomination, as the name goes, became that way because of his lust for super-strength to beat the Hulk.
Similarly, even if all startups could be funded like that, or like Uber and PayTM and Zomato and others have been, there is no guarantee they will succeed. Because making a business stable takes managing a lot more variables than merely the investment one.
Which brings us back to the other alternative – funds you must have.
This is the basic minimum investment that you would need to get your startup rolling. It isn’t too tough to calculate it. Just make sure you have sufficient buffer. And keep checking those levels so you don’t realize it’s bad only once you’re broke. The advantage of this mindset, is that even if external investments never come, your startup will be built on a solid foundation and a sound business model. That, as opposed to one of hyper-experimenting, as is sometimes the case with super-funded startups. Take the case of TinyOwl hiring and almost immediately firing hundreds of enthusiastic freshers back in the day. Or Ola paying USD 31.7 million for FoodPanda a year and a half ago, only to fire a lot of the staff and suspend its operations recently.
While such news pieces might be good to hear, they are often not something to be proud of.
A bootstrapped startup will have its share of proud moments too. And they will be far more grounded and not the kind that could be easily taken away, unlike the case with some over-funded ventures.
Now let’s look at the other main problem area of startups. The lack of traction or growth.
In my book, Design the Future, I mention what is to me, a wonderful example from both an investment angle and a strategic one that depended solely on the understanding of customer needs.
One portfolio company whose growth my boss and I used to oversee, was in the car rental space. Around 2009, it was on its way to be the largest player in India, right on the heels of Meru. Meru was then leading the pack in terms of size of fleet.
However, what was interesting, was that Meru’s business had been built largely on debt. Ours had been built on equity. Which meant we were profitable sooner, and could scale much faster. Meru had just turned profitable around 2009-10, if I remember correctly.
And back then, our portfolio company was already onto the model of partnered fleet. That is what Uber is all about now. Our company was collaborating with small tourist vehicle operators to add their fleet and drivers to their own, in a revenue-sharing model.
Now think about this. A company founded in 2006, which was already employing a model that we in recent times popularly know of as Uber, what as of today, has a market capitalization of USD 69 Billion! And Uber was founded only in March of 2009 (conceptualized in 2008).
So what prevented our portfolio company from being the one valued at USD 69 billion?
In hindsight, a lack of better understanding of the stakeholders in the ecosystem, is my guess.
Our portfolio company and other players back then were perhaps used to a certain customer price level and profitability that they enjoyed in a tried-and-tested pan-India market.
However, perhaps we failed to see that we could considerably reduce the margins and incentivize the partner ecosystem, in an effort to gain massive scale.
And with customers, it is only in very select areas that if we offer something at a lower price, they won’t take it. But certainly not with transport.
So, Uber carpeted several countries with the initial attractive pricing, and more than encouraging partner revenue-sharing and incentives.
And companies like ours, that didn’t think huge enough, shrunk into insignificance in that particular space at least, which they had ruled for some years till then.
Putting investments and a better understanding of the stakeholder ecosystem together, it is not necessary that every business and every idea has to be Uber-sized!
You can as well remain small, exclusive and yet thriving in a small or select few areas or geographies, if that is your business vision. Or, as is the case with Uber, you can be the most recognized brand in ground transport.
What is most important, is to first decide where on that spectrum you want to be. Then you need to find out (not in meeting rooms, but by spending time with stakeholders), what their likes and dislikes are. What drives them, what their profit expectations are? And how flexible are they on pricing; or, is there a better way you can offer them what you do? Something that might completely be poles apart from how you offer it right now.
Scenarios in the startup ecosystem are limitless. And so are the possibilities.
Originally written for NODD app and posted here: link