Translator: Akshay Agrawa; Reviewer: Theresa Ranft
That was an amazing story about multiple stories.
Our next presenter is Akshay.
Akshay is an innovator, he's an entrepreneur.
He's an amazing person, but one thing special about him
is he has two very interesting stories which he's going to share with you
about what happens on the inside of this creative process,
how that affects us, how it relates to us as teenagers.
(Applause)
[Akshay Agrawal]
[Entrepreneur and founder of Ukhadlo and ClassFever]
Hi. So, I'm 17, and ever since I was very young
it was very difficult for me to stay hooked to one thing.
I needed something new to tinker with. I wanted to move on.
I was a very mentally restless child, if you were to put it that way.
This trait led me into a field
into which I had never imagined I would find myself in,
and is very less heard of for teenagers to be in.
This led me to found two ventures.
The first being ukhadlo.com.
Yes, that what we named it: ukhadlo.com.
Ukhadlo was founded in 2013 when India was going through a recession,
and there was a very common cliché sentence which said,
"I want to be my own boss, I want to start up on my own."
Ukhadlo was an online portal where entrepreneurs, investors,
co-founders, angel, incubators, and accelerators could come together,
network in one place and launch really cool startups.
After working on Ukhadlo, which happened during my 10th grade,
I needed to write my board exams
and I had to put Ukhadlo on the back-burner for a while.
Before I could get back to working on Ukhadlo,
I needed to find a school for myself for 11th grade
because my current school was just to 10th grade.
The harrowing experience of a task as simple as finding a school for myself
is what gave birth to the second venture which we called classfever.com.
Now classfever.com was originally an online review aggregator for schools
to help parents make an informed decision about their child's future.
Soon the company transformed,
and today Class Fever is a big data company,
and we rank all schools across Maharashtra based on statistical analysis
and taking into account parent feedback.
We use 32 variables and we crunch 20 million variables per school
across six different factors to produce one single rank for every school
every time you visit Class Fever.
Both these ventures were equally featured in the media.
I have spent a total of two years in this field.
When I spent all this time in the field,
I realized that it presented me with an enigma:
there are more failures than there are successes
in the startup field.
You don't need me to tell you that anywhere between 70-80% of startups
fail in the first few years of functioning.
According to Forbes and Statistic Brain,
70-80% of the startups fail in the first few years.
It is so heartbreaking to see people peg it on the startups for failure.
The perceived reasons for failure include:
The startup wasn't innovative enough;
you are very operationally inefficient;
you don't have the business acumen;
you failed because you don't have enough money -
as simple as that.
Ladies and gentlemen, I'm here to tell you that when a startup fails,
or any company fails for that matter,
it is not only the startup's fault.
We as consumers of the economy have an equal part of the blame,
and sadly we have not realized that yet.
I'm here to tell you the difference between the perceived reason
and the actual reason of startups failure, at least in India.
So why do startups fail?
Let's shift lenses and look at the reasons.
One, there is a gross over-glamification of the startup space in India;
secondly, startups fail when they begin to act like companies,
and they also fail when the consumer is unable to differentiate
between a start-up and a company.
On a very high level, a start-up becomes a company
when you see its first ad on TV.
If a person is in a suit, he runs a company;
if he is in jeans and a tattered shirt,
he looks sleep-deprived, he is running a startup.
So, yes. Inside Out.
What do consumers have to do with startup failure?
Let's take the story of a man in an economy of a country
and the process goes as such.
Glamification later comes "start-ups acting like companies,"
and after that comes "consumers being unable to differentiate."
At each stage, a few startups fall out of the race.
The first step, the consumer looks into the space
and sees a lot of money flowing.
So recently Ola Cabs raised 500 million dollars,
and Flipkart has been raising billions of dollars every now and then.
In India, such amount of money is only talked of in two cases -
either in close boardroom meetings of big companies -
Tatas, Ambanies, Birlas,
or in government scams.
When you talk about this model of startup failure including consumers,
we look at the first stage when we say there's too much money.
There is so much money that the consumer is absolutely sensationalized
and he thinks all is well.
Secondly, the consumer is unable to differentiate
between the valuation of a company and the funding it has raised.
So, if a company raises ten crore rupees at 10%,
the company is valued at 100 crores,
but the company doesn't actually have 100 crores to spend.
The average consumer associates the company with 100 crore rupees
and his expectations shoot up.
And that's where a lot of startups fall out of the race.
All this glamification is very attractive to people
who believe they cannot work under somebody
and hence they should start up.
Like, "I can't work under somebody, I was destined to be my own boss."
People like those.
Let's assume the person survives this first stage,
and he is able to control himself through that glamification.
Stage 2, the person is so primed to believe
that he cannot function without funding.
His primary focus shifts from actually building the company
to raising funds.
So when we were starting out with Class Fever,
out of the eight months that we spent launching the company,
I spent four months pitching to investors, and it yielded nothing.
It yielded absolutely nothing. I wasted a lot of time, a lot of money,
and was only heartbroken
because the investors tried to entangle me in jargon,
like "churn rate," "burn rate,"
"consumer retention rate," and "sale cycles."
I didn't know! My product wasn't ready yet.
Well, we said, "We'll put a stop trying to raise funds
and let's first try to complete our product."
When a lot of these entrepreneurs begin to get office space
before they are revenue positive or the product is stable,
they fall out of the race.
When they have a fake sense of stability
they begin choosing instead of being hungry.
Being hungry is associated with the trait of the startup, right?
You're supposed to be hungry.
But when a person starts closing his doors and picks his dishes prematurely,
that's where the problem starts.
Even at this stage,
if we assume the person survives through all of this chaos,
he survived being tuned out by the investors, having setbacks.
He reaches the third stage:
When he has a stable venture, he is market-ready
and he is probably trying to sell a concept.
But he is overall stable and he is ready to go to the market.
Ladies and gentlemen, this is where we the consumers are to blame,
because right up to this point
80% of startups fail in the first two stages,
and only 20% of the failures come from the third stage;
it's the classic rule of 80/20.
Also, because when a startup is selling a concept, like Flipkart.
Flipkart had to sell the concept of buying things online
before it could sell a single product online.
If we have the rule of 80/20 in that aspect,
we also have the 80/20 rule in the reverse aspect.
Eighty percent of the startups which failed
were doing only 20% of the business
while the 20% which survive actually do 80% of the business.
This 20% of the startups failed because of the consumers.
In the end, we can conclude that the consumer is to blame
for the bad startup industry and startup failures.
Up to the first two stages, the entrepreneur was to blame.
In the last stage, the consumer is to blame.
Now, for the consumer,
this was all the mistake of the entrepreneur.
When a consumer looks into the economy, he sees a lot of money flowing.
He is unable to differentiate between a company and a startup,
and what he sees is this.
Instead of this, he sees that.
He sees a lot of money, he sees a lot of new concepts.
He's unable to differentiate if it's a startup or a company.
So, if I were to begin expecting a food delivery startup's delivery boy
to speak impeccable English, I would be very wrong.
I should start judging them on the food, right?
What we essentially have are three layers of reality distortion
between the consumer and the actual entrepreneur.
This is what causes the majority of the startups to fail.
Contrasting to what people actually believe
that the startups fail because they weren't innovative enough,
or they didn't know how to run the startup.
That is a reason, yes.
But there is also another reason which says that it's the consumer's fault,
if the consumer isn't open to accepting new concepts.
We recently had an advent of laundry startups
which would pick up the clothing from your house,
take it to some remote, unknown place,
wash it, dry clean it, pack it, and send it back to you.
How many of us still rely on the local dhobi?
We don't really trust these local laundry startups
because we are complacent with our dhobi.
If you think about it,
if you actually start using the laundry startup,
the dhobis will anyway get employed by the startup at some later date
and the startup would have survived.
Why did it fail?
Because we were very close-minded
and we said "nahi."
"Our dhobi is very good, he washes my clothes very well."
So, how do we solve this?
Firstly, we should understand the vocabulary of any startup,
or any entrepreneur for that matter.
When the entrepreneur says, "We are diversifying,"
he is essentially telling you, "We are trying a lot of other things,
we're trying everything we possibly can
in hopes that one of the many things we are trying works."
If he says, "These are exciting times,"
he's literally telling you, "We have more work than we can handle."
If he says, "We've recently been funded,"
he is just telling you, "We don't own our company any longer,
we've sold it."
If he's telling you, "We have evolved," - this is very common -
he's telling you,
"We have absolutely no idea what we're doing.
We started out with something completely different
but something completely different sold in the market."
Moving on.
So knowing the startup vocabulary is essential for you to differentiate
between a company and a start-up.
But more importantly, you should be open to new concepts.
So, if zivame.com is selling online lingerie,
people have to be open-minded enough.
"Ki chalo theek hai" - that's a viable concept.
Same with Flipkart, SnapDeal:
fashion brand - where they're trying to sell clothing online.
But people think, "How can I buy it without touching, feeling the fabric?"
That's where the new concept is killed even before it can take root.
Have rational expectations.
We talked about this with the food startup example
and the delivery boy knowing English.
And finally, be informed.
Be informed that the entity you're interacting with:
Is it a start-up? Is it new? Is it a really big mammoth in the field?
How old is it?
I know it's tedious to do this,
but if you take this effort, irrespective of the country you belong to,
you will have helped a startup in your country.
Now we all know that Flipkart is a big deal in India
because it's one of the biggest companies India has given rise to,
and it has the power to challenge Amazon
which has been in the field for very, very long.
If we are able to support startups as consumers when they are young,
you will not only have national startups
but we have the capacity to foster global startups
which can bring actual change.
A lot of new startups which have mind-boggling ideas
are killed and die out at this stage
because the consumers are unwilling to accept them.
To conclude, yes, this talk was to blame the consumer
as an equal partaker in the failure of startups.
This was also to tell you
that to the consumer, when he's on the outside,
if he sees all the glam
he is himself incited to enter the startup space,
that increases competition - more startups fail.
Think before you step into the startup field.
Please don't be fooled by the glamour.
And yes, support new startups.
Thank you.
(Applause)