Startups by 2020: Key questions asked

Startups by 2020: Key questions asked

As we prepare to move into a new year, in the coming days, unexpected events are likely to dominate and even accelerate. If you’re thinking of starting startups, a side hustle, or a small business to kick off the new decade, here are some key questions to consider before you launch.

The start of the year is usually a good time for reflection or to say, self-correction. 2019, to say the least, was a year of ‘ entropy, ‘ with unexpected events across the economic, political, and business landscape: Whether it is the scrapping of Article 370, the possible return of Cyrus Mistry to the Tatas or the cohesion of the arch-rivals in Indian telecommunications to survive.

It has shown us, if anything, that things don’t run according to a fixed plan-predictable and untouched. Or how we tend to over-emphasize the set-up – the optimum starting point – and interpret every small repair work as the plan’s fault. According to author Rolf Dobelli, the most common misconception about the good life is a stable state or situation, but the fact is, is, is accomplished by our ability to amend and overhaul or continuous readjustment.

And, as we plan to move into a new year, in the coming days, unexpected events will likely dominate, or even intensify. In the sense of the fast-paced Startup / VC tech environment and in the midst of the ever-changing world, having a perfect business plan, a perfect investment portfolio, a perfect training is nothing more than a myth, it is worth looking at some of the trends now.

How long will the Blitzscaling continue?

Losing money to win or what became known as the famous Silicon Valley growth theory-‘ Blitzscaling ‘ is a concept popularized by Reid Hoffman, co-founder of LinkedIn, and Wasabi Ventures co-founder and investor Chris Yeh. By their definition, Blitzscaling (derived from Nazi General Heinz Guderian’s blitzkrieg or “lightning war” strategy) prioritizes “speed over efficiency” to achieve massive scale at incredible speed so as to seize the ground before competitors do and risks “potentially disastrous defeat to maximize speed and surprise.”

Find one of the day’s most valuable companies-Amazon. Amazon prioritized growth over profitability to build a hugely technical, customer base and infrastructure advantage. Jeff Bezos has taken an unprecedented risk in his bid for hyper-growth, borrowing billions to finance his ambition. And as companies began to be “Amazoned,” Venture Capitalists and start-up founders picked up ‘ Blitzscaling ‘ as the new tech-monopoly slogan.

However, the recent drumming of some of the flagship startups, that rose to fame as torchbearers of this Silicon Valley strategy, in public market has raised serious questions on this growth-centric strategy.  Now there is a growing buzz among VCs about the feasibility and sustainability of ‘ Blitzscaling ‘ as a growth model. It remains to be seen whether 2020 could be at the turning point for VCs / Startups betting on ‘ Blitzscaling. ‘

Read The foundations of a good start-up

Should SoftBank change its plan for the investment?

The year 2019 has been the litmus test for SoftBank, as its famed Vision Fund reported a $6.5 billion loss – first quarterly, in the last fourteen years – due to failure of its marquee investments, Uber, Slack and WeWork.  It is now being called out the investment thesis of building monopolies by prioritizing growth backed by virtually limitless capital with an end-game to control market and prices by killing competition.

There are plenty of comments claiming that SoftBank may be gearing up to change its strategy, funding hypergrowth, while others expect the late-stage investor’s famous demise. Often our judgment, however, is biased by ‘ heuristic availability, ‘ i.e. biased with the information available in front of us. It can turn out the reality is quite different. Should we foresee a future without the benefit of Softbank-the answer is a confident “yes” or a “no.”

Can startups of high value grow and monetise?

We’ve seen tremendous growth in technology space over the last decade, driven by innovation and massive capital. It is now time to consolidate and to monetise. First, there are increasing soundbites coming around that several startups are considering listing, such as Freshdesk, Pepperfry or an Ola. Who will first float the public and which markets will they choose – a NASDAQ listing or Indian bursary listing – is yet to be seen.

Second, many tech-unicorns that have ramped up through multiple business lines are looking for opportunities to merge their core and non-core businesses–including UberEats with Zomato. Consolidation would help the Consol-entities gain a greater share of the market, create market dominance and better control of the industry in an effort to move towards profitability.

Can 2020 really marks the beginning of mergers and acquisitions through high-value start-ups to consolidate the market and prioritize profitability overgrowth, and opt for public listing – on home markets as well. Who’s the first to bite the bullet?

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