Point Black: Slowdown Showdown

Long time ago, when Aishwarya Rai was on the Oprah Winfrey Show she was asked by Oprah, ‘What do you want to say about the fact that you still live with your mother?’ Aishwarya nodded her head, rolled her eyes back and said in a heavily Americanly accented way, ‘Oh that’s such a topic.’ Whenever I see a topic being discussed to death I always think of that.

Currently, the topic is the ‘Slowdown’ in the startup world. Everybody has something to say about it.

Venture capitalists are putting their heads back and nodding wisely and saying, ‘Oh, the good ideas will still get funding as long as their revenue projections follow the symmetrics of macroeconomics in consonance with gross margins as articulated by the constitution of the Internet world’ — or some stuff like that!

Every entrepreneur sitting with a couple of million dollars in his bank account is giving lists on how to survive the slowdown:

1) Conserve your cash flow
2) Decrease your burn rate
3) Be careful about hiring.

And other stupid basic advice like that which even a Class VI student of economics would know. Really!

In fact, from bankers to marketing gurus to IIT profs to economists to panwallahs, everyone has an opinion.

So is there anything original to say about this topic? Let me try.

First, is there really a slowdown? Or was there an unreasonable wine and salad era before? Indian startups have raised over $2 billion of funding in the first half of this year with over 500 or so companies getting funded. That’s not half bad. By my calculations funding will be down about 25 per cent this year — maybe you could call this a course correction.

Second, is there any need for advice? Or are we just saying stuff to those who are practicing it anyway? Those who had their fundamentals right with relation to projections, cash burn and expectations will continue to do well. Those who had these wrong would fall by the wayside.

Third, how long can a slowdown actually last? Very soon we are going to have 500 million people on the Internet. With a per capita income of $2,000 that’s like a gazillion bucks available. Surely, startups can figure out how to make money.

Lastly, and connected to the above point — and though I’m not an economist I’m going to stick my neck out on this one. Where’s the money going to go? World money has to go somewhere. China is banning one site after the other. US is getting trumped. Japan is in recession. Britan is exiting. Welcome to India.

Now let me touch on what we’re doing about this ‘slowdown.’

One, the whole office has become a marketing department. From creative to content everyone is looking for new clients or helping manage new clients. There are WhatsApp Biz team groups and once we find that someone’s uncle’s cousin’s brother can be a new client, we pounce.

Two, the new buzzword is alliances. Rather than hire more and more people we are entering into alliances and arrangements to magnify our business. No extra overheads — only revenue share.

Big fat salaries that a person can take home are out. Everyone is working on part basic and rest incentives. There are no farmers in our team – only hunters.

I guess there’s only one way to tackle a slowdown. Speed up!