In 1842, when gold was accidentally discovered in California, early gold diggers till 1848 found gold deposits in various pockets. Much like the early startup successes of today – RedBus, Yelp, Amazon, Facebook, JustDial, Google, Naukri, …
Circa 1849, the rush started. Word spread. 90,000 gold seekers arrived from land and sea. And by 1855, this number was 300,000. Much like how the number of startups have swelled over the last 5 years.
However, rush yielded value for only some group of prospectors. To ones that worked hard. To ones that looked in different places. To ones who used creative techniques. As startups strive for profitable growth in an environment that has grown competitive, they can learn from the ‘forty-niners’.
As we are working with scale startups, we are seeing several founders focusing on the basics like customer service, value proposition delivery, et al (rightfully so!) but ignoring several opportunities that might be available given their capabilities and assets. Somewhat contrarian but we contend that if the resources permit, scale startups should start looking for gold more creatively and often beyond the core. (and we are not talking about the usual ‘use data you have’ and ‘eyeball monetization’ here)
- New customer segments esp Corporate (B2E): Startups providing B2C services are often not paying attention to tapping the corporate segment (B2B2C or B2E directly). Our research shows that a leading OTA’s (Online Travel Agent) service levels are probably the best in B2C but try their customer journey in ‘for-Business’ portal, and you might not feel like you are dealing with a leader. In fact, a smaller OTA scores better. But, some others have not even created an offering in this segment.
- New services or products that leverage existing assets and acquired customers: Even the incumbents did this to grow. Nike started with a sport and then did quickly moved into gear, merchandise and even accessories from shoes. And then, they picked up the next sport. Several startups could expand their offering set the same way rather than continuously burning money in acquiring new customers. If you are not in a ‘winner-takes-all’ market, thing hard about this.
- Integrated consumer-oriented play – new business models, more operating models: Most fashion retailers or even ecommerce player (Amazon being the frontrunner globally) are quickly integrating the offline with online. Because that’s what the customer wants. And if it needs a change in the model (vs what you told your investors in series A round), so be it. Sustained value creation needs sustained innovation and that involved consolidating your position with the customers in the manner that will fulfill the customer need the best.
- Repeat and replicate: As startups scale, repeating the success is often overlooked. Consider an online-restaurant which has built a good brand. Opening up several other consumer fronts (new brands for fast food vs Chinese vs Fusion vs Healthy Eats) from the same central kitchen can actually multiply the business without adding much complexity to the business. Works especially well in retail spaces which are traditionally very fragmented. Think Luxottica, which actually owns most common eyewear brands you know of.
- New geographies: Easier said than done! Several known startups have scaled back their international presence (like the food aggregator Zomato) or regional presence (like local e-grocer Grofers). But that is because their operating models led to fair bit of complexity while the return was relatively smaller. But if you are an Enterprise applications or services player, expanding your GTM to new geographies while delivering from the core setup might actually help you build moats around your business.
We are helping several fast growth companies dig gold quicker by digging in areas around them. Time to just ‘pan out’ the gold from the river or pick up the gold under the rocks is over. It’s time to get more creative – much like how the largest source of gold ultimately was hard rock mining, not the river bottoms where the gold originally emerged.
Note: examples above are just our conjectures or scenarios on what we think some of the above mentioned scale startups are or might or should be thinking.