Location Doesn’t Matter: Business Success Depends on Product-Market Fit
Spotify is from Sweden. Skype was born in Estonia. Alibaba came from China. They were all groomed into giant companies with a global footprint.
For some, it might be easy to assume that a SaaS technology business located in Chennai, India, would be set for failure. But that’s not what initially stopped us.
In fact, when I first launched OrangeScape, it was at one of our industry’s most prestigious events. Very few companies had the chance to do so, and as a result, investors were practically knocking down our doors. Early customer signups were great, and the press loved our business. We raised $1 million in investments within 24 hours of reluctantly agreeing to raise it because it helped set a floor valuation for the company later.
But we hadn’t achieved product-market fit yet. We thought the companies who were signing up with us were guaranteed customers, but they weren’t. Thousands of businesses created trial accounts, but their conversion rates were low. We were a global business, and running a startup across geographies put a strain on our resources.
As a result, investors’ confidence dwindled, and they went from ecstatic about the company to wanting to protect their investments. Many venture-backed startups experience such difficulties, with 75 percent of them failing, according to a study by Shikhar Ghosh. Most fail for seven reasons, but we initially failed for just two: We were going after the wrong segment of customers, and we had access to money too soon. If you are pointing in the wrong direction, going fast will only make it worse.
Turning the Ship Around
In the words of Thomas Friedman, the world is increasingly flat. Startup Genome, the report that evaluates ecosystems, discusses how the traditional knowledge that exists within an environment supports and leverages entrepreneurship.
So while we were located in a small city in India, our issues weren’t about location. As a business, we were chasing a customer for whom the product (at that time) didn’t deliver the value and expectation. On the other hand, the company was based in India and running on a high-ticket, high-touch sales process. A million dollars go away quickly when you do that.
As business leaders, it can be challenging to take a step back and find your footing again. We had to, and we came out of it with a successful business. If your startup is struggling to get off the ground, here are some strategies I recommend based on my experience:
1. Reevaluate your target market.
The first thing we needed to realize is that we were targeting the wrong consumer segment. We were trying to work with enterprises when our ideal customers were small- to medium-sized businesses. SMBs were nimble and hungry to have their problems solved with the right tool. Learning everything about your customers and their unmet needs will be the difference between success and failure.
2. Examine your conviction to solve the problem.
If you realize you don’t really want to solve the problem your company set out to solve, then you might not be in business for the right reason. When we started resolving our company’s initial problem with customers, we had to put in lots of hard work to get back on track. If you’re not willing to sacrifice some personal time, then it might be time to step back and change course.
3. Follow a feedback-fix loop.
After we made sure our employees were in it for the long haul and we knew who our customers actually were, we worked around the clock. Everyone, including myself, took customer support calls to learn what customers valued about our product and what wasn’t working. Using that information, we would release a new fix the very next day. We followed a “release-feedback-fix-release” cycle, which eventually helped us achieve product-market fit.
4. Find your core team.
By the time we started working on our feedback-fix loop, we were down to just eight team members. Most people will flee a sinking ship — and that’s OK. The people who stay, believe in your company’s vision almost as much as you do, and they’ll stick around through the ups and downs. When 4 out of 5 new leaders don’t feel prepared to get buy-in for their team vision, according to HubSpot, it’s natural to think you did something wrong. But the people who stay will work hard, even if they’re not the best talent in the world. Luckily, hard work beats talent nine times out of 10, in my experience.
5. Reduce your dependency on venture capital.
Once a startup starts to go south, the first weight on its shoulders is placed there by investors who want to salvage their investment. That’s a huge risk, so bootstrapping might be a better alternative. Many successful businesses, including Tastefully Simple, took their time and tested their product. It’s OK to slowly build a world-class product rather than quickly scaling because you took on too much venture capital. It takes courage to not waver every time you hear about your competitors raising capital, but remember that your competitors might be doing you a favor by creating a market for you to serve after they’re gone.
Spotify is from Sweden. Skype was born in Estonia. Alibaba came from China. They were all groomed into giant companies with a global footprint. Instead of worrying about your location, you need to figure out whether your product is solving a real problem and whether you’re acquiring the right customers. With that as the backdrop, all you have to do is make your business work.
Suresh Sambandam is the CEO of KiSSFLOW, a disruptive, SaaS-based enterprise-level workflow and business process automation platform with more than 10,000 customers across 120 countries. Gartner recently named KiSSFLOW as a niche player in its Magic Quadrant for Enterprise High-Productivity Application Platform as a Service report. Suresh is an expert and renowned entrepreneur on a mission to democratize cutting-edge technologies and help enterprises leverage automation.
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