The transformation of India that started in the 1990s with liberalisation has seen the creation of a global powerhouse in IT services over the past three decades. This economic process has now taken the next step in its evolution with the emergence of a startup ecosystem ripe with innovation and opportunities that will end up creating our next powerhouse. India now has the world’s third-largest startup ecosystem, with the number of Department for Promotion of Industry and Internal Trade (DPIIT) recognised startups touching 1,17,254 as of December 2023.
However, this ecosystem is nascent. In India’s highly competitive marketplace, competent business leadership plays a key role in a venture’s success. Leadership in startups is about more than just managing people or resources; it’s about a series of strategic decisions that will either take an idea from its humble beginnings all the way to its maximum potential or cause its premature demise. These are some leadership lessons that entrepreneurs looking to think big but starting small will find useful.
Having a Vision Is Critical
For a startup to grow beyond being an SME business, the idea needs to be scalable. Founders need to start by building a grand vision of their story. Building the vision is important as it helps founders discover their idea’s full potential by visualising and then articulating its future.
The best practice here is to start with the end in mind, then plan and work backwards from there. Keeping their goal in focus helps trace not just the best path to achieve it but also all the alternative routes and the potential obstacles on them.
By articulating their future and the plan to achieve it, founders can learn the tough balancing act of how to keep their heads in the clouds but their feet firmly grounded. It’ll also help bring various stakeholders, such as team members, investors, and even customers, on board, as it provides a benchmark for others to identify if they align with the startup or not.
Super Focus – The Secret to Early Success
Startup founders have limited resources at their disposal. So, it’s critical to not just be focused but to be ‘super focused’ in order to create and deliver value.
Let’s say that your startup idea is to build specialised computers, maybe for gaming, crypto mining, and the current hot trend of building AI. A founder chasing all three opportunities is almost certain to fail because each opportunity requires building different sets of capabilities around supply chain, marketing, and sales. So, building three types of computers can take two to three times the resources needed for just one.
Founders need to focus on building one great product or service that tackles the challenges faced by their core customers and does it really well to draw these customers away from competitors. If focus means building specialised computers, then ‘super focus’ means building just an amazing gaming computer that’s significantly better than its nearest competitor.
Rapido is an example that only focuses on providing bike taxi services through its app. By eliminating other forms of transport like rickshaws and cars and focusing on bikes, they’ve achieved rapid expansion with operations in over 100 cities and raised $200 million in Series E funding in September 2024, reaching a valuation of $1.1 billion.
Go Direct
Startups die without fast-growing sales. Sales require distribution, which is very complex. Often, they involve stakeholders like stockists, distributors, wholesalers, and retailers. Each intermediary not only requires their own profit margin but also management expertise and resources. For startups, this adds cost and complexity when what’s needed is sales through simplicity.
The way forward, especially during the early days, is a direct-to-consumer (D2C) approach. Several Indian startups have successfully demonstrated the potential of D2C models. For example, boAt is a well-known D2C brand. Founded in 2016, it utilises a D2C model to sell its audio products directly to consumers through online platforms like Amazon and its website, bypassing traditional retail channels. This has allowed boAt to establish a strong market presence, achieve revenue of ₹2,873 crore in FY 2022, and raise approximately $177 million in funding, positioning itself as a leader in the Indian consumer electronics market.
Another example is the unicorn Urban Company, formerly UrbanClap. Founded in 2014, it concentrated on providing a variety of reliable home services, such as beauty treatments and cleaning, directly to customers. Their D2C model enabled them to improve quality and customer satisfaction in a highly unorganised industry while providing a reliable and consistent customer funnel to service providers. They’ve now expanded to over 40 cities in India as well as internationally.
According to a report by Avendus Capital, India’s D2C market is expected to have an addressable market of $100 billion by 2025, as both internet penetration and preference for online shopping grow.
For startups, the D2C model allows them to keep supply chain management simple and customer support aligned with market demand, which can reduce costs and also allow the founders to gather valuable insights into customer needs, behaviour, and preferences. These insights are crucial to learning how to build early loyalty.
Execution Over Ideas
In the world of startups, there’s a common misconception that success hinges on having an amazing idea. While a great idea can provide some edge, its execution ultimately determines success. Many founders focus on launching the ‘next big thing’ rather than building, refining, and executing a viable business plan.
The path to effective execution requires founders who embrace decisive action. It also requires simplifying processes, reducing waste, and continually aligning all stakeholders to build and sustain momentum.
Let’s consider OYO Rooms, founded by Ritesh Agarwal, who dropped out of college to pursue his startup dreams. OYO’s concept of budget accommodation was not new, but by focusing on execution, like standardising customer experiences and aggressively scaling the business, OYO became a global hospitality giant currently operating in over 200 cities across 4 countries.
Conclusion
India’s startup story has only just begun, and the potential is immense for those who dare to dream big while mastering the nuances of starting small. Leadership in this journey is about making thoughtful choices, navigating challenges with clarity, and bringing all stakeholders on board with a shared vision. By executing with focus and precision, today’s entrepreneurs can not only build thriving businesses but also contribute to shaping India’s future as a global innovation hub.
The contributor is a Board Member, Entrepreneur, and Harvard HBS Alumnus