Dread Profitability!

No matter where I go nowadays, if there is one term I can be sure of hearing is Startup. It’s in fashion. Everyone is doing it. Everyone wants to do it. Everyone dreams about it. Most are doing it wrong!

A few days ago, I was reading this one article about the growth of the Indian e-commerce market and how the likes of Flipkart and Amazon and Snapdeal are going all out. All good. I am getting things for cheap. Then comes PayTM. Wow! Shopclues is a good 5th option to have, thanks to those advertisements of that guy dancing rather funnily. Askmebazaar had the likes of Ranbir Kapoor and Farhan Akhtar promote it (show off their investors’ money), but I am not sure how much of that is going to work out for them. For once, who names their e-com site ‘Askmebazaar’?

Anyway, back to where I was. I was reading about this industry, was taking keen interest in whatever was written and then, I stopped. There was this one paragraph where Sachin Bansal was quoted. Not sure about his exact words, but it said something which got me into a fix. On being asked about making a choice, Mr. Bansal said that Profitability is not something he is focusing on right now. I thought and thought and thought. Sachin Bansal has said it. Should have something deep within it. Did he mean something else? Was he being cheeky and hinting at the fact that he is looking for Supernormal Profits and not ‘just profits’?

No.

He was clear. Everyone is clear. The PayTMs giving me cashbacks are clear. The OLAs giving me Free Credits are clear. All the other X,Y,Z startups are clear. And they have a very simple drill — Startup, Raise Funding, Splurge, Shut Down. I read a lot and Startups generally have always fascinated me. I have always been following all the news articles coming out and a trend that I have started following is that 2016 is pretty different from 2014 and 2015. Whenever I would receive a Newsletter containing news about the Startup World previously, it would have at least 3 new startups that had raised funding. I felt optimistic. It’s in fashion. Everyone is doing it. So many people are doing it right. I started up. Would you believe that I even raised a Seed Fund within 1.5 months of inception? Things went south from there and I took an early exit (actually, I was kind of kicked out by my co-founder and I got some money in the bargain). Coming back, everyone was raising money. Everyone was innovating something new in this country. Everyone was building a successful business house. Brilliant. Or so I thought!

Where this goes from now is pretty obvious. Myntra is a part of Flipkart and so is Jabong. All 3 are in losses. Market Share is the focus. Good. Is it a Perfect Competition? Yes. Can you ever earn Supernormal Profits? No. Will you ever recover all these losses then? Doubtful. Hailing from a Marwari family, one thing was made very clear to me as a kid whenever I w0uld visit my office — profitability is the key. Set your processes, have your values in place, earn profits and grow. That was how we were moving forward. That was how we have all moved forward. Yes, we did make losses here and there and but all was calculated and people had a vision. In the end, it was our own money that was buying us food and shelter. Earning profits was called being normal and taking risks used to be justified.