Founders’ hell

For the early part of 2013, Navneet Singh and Aadhar Agarwal were struggling to raise funds to keep Chhotu, their New Delhi-based e-commerce logistics firm, alive. Up against a (then) sluggish e-commerce market and muted venture capital activity, they lost the fight. Chhotu had raised around Rs.3.1 crore from angel investors, including Vijay Shekhar Sharma, founder of One97 Communications, a mobile Internet company, and Dinesh Agarwal, chief executive officer (CEO) of online marketplace IndiaMART.com. Chhotu shut down by November 2013.

Singh calls the six months before and after the shutdown a “near-death” experience. “Highs and lows are a part of life. But the disappointment when things go wrong in a start-up is intense,” he says. With trying to keep your head above water is the emotional fatigue of putting up a brave front. “You can’t show anybody—employees, customers, investors, family—how tense you really are,” he says.
Singh’s saga isn’t rare but one that is often untold. The heady tales of valuations, acquisitions and awards, deserved as they are, keep the not-so-glamorous side of entrepreneurship—the stress, anxiety and fear of failure—out of focus.
Mayank Dhingra, a Delhi College of Engineering alumnus, who used to run book-delivery service Dial-a-Book, says the “perseverance paradox” at the heart of entrepreneurship is the primary source of the angst. “No amount of hard work can guarantee success. You can work non-stop through weekends for months and still not get the right product-market fit.” Dial-a-Book was founded in February 2009 and by the middle of 2013, Dhingra, who had bootstrapped his venture, realized he couldn’t afford to keep losing money. In August 2013, he shut the company down, which happens to more ventures than people would imagine, says Dhingra.
From the nine companies in Dhingra’s 2012 incubator batch at The Morpheus—a leading seed accelerator which runs four-month-long batches for start-ups—other than two, the rest have folded up. Some as recently as a few months back.
Staying persistent
“The first rule of entrepreneurship is: Get used to being heartbroken,” says Sharma of One97 Communications.
Sharma, who founded One97 in 2000, shares that the initial three or four years into the business, which at that time followed a value-added services (VAS) model, were hard for him too. “It might have been the turn of the century but entrepreneurship didn’t attract the hero worship it does today. Nobody thought you were cool to be one. In 2005, my father actually asked me to get a job because he was worried nobody would marry me without one,” Sharma jokes.
Singh ecohes this: “Many people don’t know what it takes to build a company; they are so many challenges.”
There are darker memories too for Sharma: Months of worrying about cash flow and weeks without rent money. “I didn’t want the golden handcuffs of a well-paid job though. I wanted to build something large and meaningful,” he says.
That is an introspection Sharma encourages entrepreneurs he mentors—or those he invests in through the One97 Mobility Fund his company has set up—to go through. “Your truest answer about why, what and when has to come from within.”
Interestingly, Rishikesha T. Krishnan, director and professor of strategic management at the Indian Institute of Management, Indore, says Indian entrepreneurs demonstrate a greater stamina to persevere compared to founders in the US. Research by Harvard Business School’s Shikhar Ghosh, published in a Harvard Business Review article in 2013, found that 75% of all start-ups fail. Family structures in India allow founders to hold on, especially when they are younger. Married entrepreneurs with working spouses tend to persist for longer as well if they haven’t created very high-cost structures, Prof. Krishnan says.
Multiple people founding teams together—often the structure in evidence when mid-career professionals get together to start out—can lessen the brunt of loneliness and stress as well. A shared reservoir of networks, ideas and optimism helps to keep disillusionment and despair at bay in such teams.
Start-ups are “faith-based organizations”, says Rajeev Banduni, CEO of GrowthEnabler, a technology platform for entrepreneurs seeking mentorship and advice. “You can’t build anything alone. No one person can sell, market, build a product and run the operations. You can bounce ideas off each other, and share the faith.”
Yet, the eventual decision to keep the fight up, or throw in the towel, is agonizing, entrepreneurs say. Much of the mental stress of entrepreneurship comes from it being a waiting game; a limbo where neither success nor death seems immediately apparent. Worse than even closing shop is companies settling into stunted growth, a dwarfed state of becoming older without scaling up.
The “Lean Startup” model can be extremely useful in gauging viability, says Prof. Krishnan. A core component of the Lean Startup methodology, developed by entrepreneur and author Eric Ries, is the build-measure-learn feedback loop. Lean Startup’s cycle of turning ideas into products, measuring how customers respond, and then learning whether to “pivot” or persevere is a valuable paradigm for entrepreneurs.
The upsides of the struggle
Yet, the immersiveness of the entrepreneurial journey, the opportunity to create something original and the potential upside of the risk make up for the gritty days, entrepreneurs say.
“I express myself through my ventures,” says Singh who, less than a year and a half after Chhotu’s closure, is in start-up mode again with a venture in real estate. Not that going back to jobs is a worry for founders. Sharma has a well-known hiring bias for those with entrepreneurial stints. “People who run things independently, or try and build something, are superior people,” says Sharma. “They are used to taking decisions, and growth companies like ours need that.”
The start-up phase might be especially challenging, but size and a robust growth curve aren’t foolproof shock absorbers against entrepreneurship’s bumpy trek. Namit Malhotra, founder and CEO, Prime Focus World, a global visual effects, animation and 2D to 3D conversion services company, was at the top of his game in 2007. In fact, his journey from the time he began a small editing studio in Mumbai as an 18-year-old in 1995 was the perfect feel-good business success story. At the beginning of 2008, Prime Focus had an annual revenue of Rs.230 crore and 1,200 employees across 17 global offices, thanks to an ambitious acquisition spree of studios in the US and Europe.
“I believed we had de-risked the business by diversifying the company across geography, focus areas and skills,” says Malhotra. The strategy came to a naught during the 2007-08 financial crisis. The entertainment industry’s financing was severely hit, and Prime Focus’ share price tanked. The law of averages caught up with us, Malhotra says. “We went from a huge high straight to the bottom. I questioned myself a lot—had I been too ambitious?”
In 2010, Malhotra moved to Los Angeles, US, to fix the slide, and focus on the 2D to 3D conversion work that has reset the company on the right track with work on movies such as Avengers: Age Of Ultron, Gravity andTransformers: Age Of Extinction. “The past five years rebuilding Prime Focus have been the toughest since I founded the company two decades back.”
Yet, it’s this ability to get out of storms alive and learn every day that best defines entrepreneurship, says Malhotra. “Growing up was painful but we sustained. It makes the journey somehow feel more real, more valuable.”