Is your startup making one grilled fish, or a 40-item budget thali?
If you’ve ever visited a western restaurant in the US, you’d have seen someone order a grilled fish. It’s just one fish, slightly bigger than a quarter plate, perhaps with a hint of olive oil brushed on it. The gourmet will perhaps add salt and pepper — and that’s the meal. It’s one grilled fish, but probably the best damn fish that person has ever had!
In India, you might go to a budget thali place that has a 40-item meal, and they’re proud of the spread. One of those 40 might be good, most are average, and a few items suck. And the next week you might go to another place.
Why does it matter?
There are tons of Indian startups that build a thali-product, instead of a one-dish-product. Why does it matter?
This is a lesson I learnt from my first startup. It was a very costly lesson; burning almost a million dollars, more than five years of my life, and along the journey spilling the blood, sweat, and tears of a set of hugely talented founders.
As a developer myself, I’ve found building most things easy. Figuring out what to build is really, really, hard. When you build multiple adjacent features that serve different user personas at an early stage in your startup, you end up deluding yourself that there is a market, when in reality you actually have multiple small markets.
If you build a thali-startup, you end up building a product that no one really loves.
And a startup simply doesn’t have the resources to build a world-class thali-product — by definition, a startup is very resource constrained, and you need significantly more resources to build the 40 items on the thali to a world-class level, compared to building one world-class dish.
If you build a thali-startup, you end up building a product that no one really loves. Everyone claims to like your spread, but no one loves a particular dish. Some of them like a part of your product they use, but they’re really indifferent to the rest of what you build.
Indian buyers used to like thali-startups. A LOT. In a low-trust environment, working with one vendor who gives you everything is better than working with multiple vendors, even though you don’t get world-class quality on anything. This is why ‘No one ever got fired buying from IBM’ made sense in the enterprise world — you trust IBM to serve your needs well enough.
Today, with costs of integration dropping due to structured APIs, more demanding users looking at user experience, and managements demanding quick adoption, this has changed massively in the US, and somewhat more slowly in India. Customers are demanding best-of-breed point-solutions that integrate and play well with a diverse ecosystem of products they already have, rather than broad solutions that don’t do anything world-class.
My world’s best Kerala urad dal pappadam
On the other hand, a one-dish startup has no choice but to be world-class with what they build. They have no choice but to build partnerships with others who build world-class products. No choice but to have a cost-effective GTM, with short sales cycles (a quick yes or no). Naturally, buyers end up getting higher quality from a set of startups each doing one thing well, rather than from one startup serving a budget platter.
Look, for instance, at a Stripe building partnerships with a Shopify, an Uber using a Paytm wallet, or in an earlier generation, a Steve Jobs building a partnership with Adobe/Photoshop, or a Sun/Java building partnerships with Netscape. These were partnerships that delivered tremendous value to their customers, because they were the best in the world at what they did, and the partnership brought tremendous benefits to both players.
My gulab-jamoon beats your falooda
Now consider the competitive implications of a thali-startup. Since you do everything, you are automatically competing with everybody in the market. There is no one in the market who is a potential partner. In fact, in an enterprise context, you even have System Integrators, who are usually potential channel partners, as competitors.
A one-dish startup is also more attractive to acquirers, because there is a lot more depth in the product, compared to a startup that has very wide breadth, and very little depth.
Look at Cisco for the way they rapaciously acquire networking startups that have customer-proven products, in the core Cisco market of networking. Cisco buys any startup that is building a world-beating product, knowing full well that the army of Cisco sales people will be successful at selling it their wide roster of existing customers, at a much higher margin than the startup would be able to achieve.
I also make dry mango pickle now, apart from my Andhra mango pickle
Some folks immediately ask me when it’s ok to build multiple products. The answer is simple — it makes no sense to do a multi-cuisine buffet for 10 people. But when you get to 10,000, a multi-cuisine buffet makes lots of people happier. So if you’re at less than a million dollars in revenue, focus on building one great product. If it doesn’t work, pivot to a different product. And once you get to mid-7 figure revenue, then start thinking about your second product. And even then this product should be a line-extension that sells easily to your existing market; using the credibility and relationships you’ve built will make the add-on sale much easier.
Focus on the customer segment you have that derives most value from what you do.
So are you on the path of building a thali-startup? Cease and desist. You should instead focus on the customer segment you have that derives most value from what you do, get them to commit skin-in-the-game to building your vision of the product to serve them, and find partners to go to market with, who have complementary products. This is the path to a truly world class product startup.
It’s time now for Indian entrepreneurs to migrate from budget thali products to a single but world-class grilled fish product!
At Upekkha, we help founders find the right SaaSy meal to serve their customers :)
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