Persistent Framework For Start-Ups

Let me start with a question. Where did you go for your last holiday? Shimla? Nainital? Mussoorie? Jaipur? One of these places, isn’t it? And the one before that? One of these places, again? And before that? Again, the same? So boring isn’t it?

But what if you had a choice? What if you could stay in a village, and actually experience village life. Where you could see crops being sown. Or cows being milked (or buffaloes – it doesn’t really matter which). Or even watch a panther or two prowling around). Sounds interesting? Of course it does. Because most of us city folk have never experienced village life. And that is exactly what Soumen Karmakar and Shuddha Satwa Ghosh thought when they launched their unique startup called VilloTale. Where they identified high-quality homestays in villages, branded them ‘VilloTale’ (rather like the Oyo Rooms model), and then marketed them online to travellers.

But will VilloTale succeed? Well, to find out, let’s analyse the business using the well-known ‘persistent’ framework. First the ‘p’ in persistent – are they solving a problem? Of course they are – the problem of travellers going to the same old boring places again and again. And then the next letter ‘e’ – do they have an earnings model? Yes, they get a commission on each transaction! What about the first ‘s’ in persistent, namely size of the market? After all, if you are operating in a small market, you’ll soon stagnate. Fortunately, the market for homestays is huge. But it’s also very, very crowded with competitors – led by the mammoth Airbnb. But here’s the key – VilloTale had identified a large enough niche within this large market of homestays (the ‘n’ in persistent). That of village homestays. This niche itself was large enough, and had almost no competitors – so our young friends would not have to compete head-on with giants.

And now for the risks in the business (the ‘r’ in persistent), starting with competition. You see, every business needs an entry barrier (the ‘e’ in persistent), which prevents a competitor from getting in. Obviously, if you have an innovative solution (the ‘i’ in persistent), that gives you a decent entry barrier. Clearly these guys did have an innovative solution. But there was one other critical requirement for creating an entry barrier – namely scaling up rapidly (the second ‘s’ in persistent), and thereby building a solid brand. Fortunately, like Oyo Rooms, the business was highly scalable because the founders did not invest in buying properties – they simply partnered with existing homestays.

And finally, the two ‘t’s – team, starting with the founders, and traction. I can personally vouch for the founders – passionate, hard-working, gung-ho, and always willing to try out something new. Yes, Covid had drastically cut down travel and therefore impacted their business, but now that things are opening up – well, bookings are picking up. And that’s traction.

In other words, as a business, VilloTale, passes the ‘persistent’ test with flying colours. And if you happen to be the founder of a startup, wouldn’t you like to apply this test to your startup as well?

Dhruva Nath

Guest Author Dr Dhruva Nath is Professor and Chairman of the Centre for Entrepreneurship at the Management Development Institute, Gurgaon. He is also an Angel Investor. He can be reached at dhruv@mdi.ac.in.