Lesson for Start-ups: How a wrong hire can ruin the future of your business

Lets start from the beginning - a great new business idea has just struck you, it is time to tell your girlfriend about it and see what she thinks. She [of course] thinks its awesome! 

So it's time to starting working on it along with your 12 hour schedule (1.5 hours of drive each way and 9 hours in office on a good day). Just to give yourself a boost, you buy the right domain name from GoDaddy, look up details of registering your own company, make a few excel sheets and start putting together numbers, create a survey or two on SurveyMonkey for your friend circle++ 

A few months pass and its time to go for the kill, you start looking out for co-founders and friends (of course) are the first people you reach out too. The list just narrows down to most of the risk-taking guys who will be willing to let go of the six figure monthly salary and work out of a basement sitting on a bean bag. You find only a few such people and decide to just go for it - the BIGGEST mistake, you compromise.

If you start wrong, these hiring choices will continue to plague your business

The mistake does not end there, you also compromise on the the first few employees you hire. You think if these guys are joining you, they are committed to the business and your vision. You will figure out later if they really were committed or not. 

This team is the backbone of your organisation, if you are the engine, they are the other important parts of your car - everything from brakes to the steering system, they all need to work together to make the most out of the fuel (funding) that you have gathered. Just imagine fuel being poured into an awesome engine (that's you), but the steering system not working properly and the car going off the road, and maybe hitting a wall at full speed! Bam! 

This is what will happen if the founding team is not aligned, to the vision, strategy, product, positioning, way forward and a lot of other things. 

The high profile exits from the start-up ecosystem and the insanity in terms of strategic decision making is a live example of this issue in India. Take the example of frequent changes in business models for Myntra (website to app, multi channel to app only, now back with website) - all this was driven by the management of FlipKart. On top of it, there have been so many exits and new faces to manage the show. Everyone brings new ideas and perspectives, pushes for implementation of those, and if it doesn't work out, he/ she can very well be fired or leaves the company. But what happens to the business amidst this chaos? Were all these decisions of changing business models a rocket science? Let's see some examples from FlipKart itself:

• Launching its own payments gateway, then losing focus on the same and withdrawing it: definitely not rocket science, it had to evaluate its positioning, how will this launch benefit, what is the investment and returns, what is the time-frame etc. It is now entering the space again with PhonePe
• Launching e-books and withdrawing it : FlipKart tried hard to get into e-books to challenge Amazon, I particularly liked the idea and even the e-book reader app. But this too, unfortunately, was withdrawn. Why? God knows!
• Myntra juggling between website and app strategy : enough already said about this 
• Deciding to go app only itself and telling the press about it : disaster management could have been called in if they actually moved ahead with this
• Hiring top talent from IITs and later withdrawing the offers : least expected from a forward looking agile company in the e-commerce space 

These are things are cannot be done and undone like a Ctrl Z on a keyboard. Decisions not taken to drive the organisation towards a common goal can have long lasting consequences for the business. 

Let's get some traditional industry perspective here - textiles.

Just see the latest example - the fall of one of one of the shining stars of India's textile imports - Welspun. Here's a look at it's share price:

What led to this? In short, Welspun is dependent on a few large clients for most of its revenues, the clients are in the West and they are ultra-quality-conscious. One probe into the promised quality of bed sheets supplied by Welspun has led to most customers ordering probes and stock crashing from nearly INR 1000 to <INR50 today. How is this connected to wrong hiring? May not be as direct as in the case of start-up's, but the Head of Quality Assurance and his entire team were definitely not aligned with the companies vision and strategy. CEO/ MD's Office and the Quality Department were not on the same page in terms of importance of maintaining the client relationships and what one poor quality bed sheet can result in.

Quality team was the "steering" for this business, it led to a crash 

To sum up, the founders need to ensure that everyone in the top management is aligned with what the company is trying to achieve and steer their individual decisions in the right way, else, the slow moving but well-steered will survive while the fast paced and imbalanced one's with end up crashing. 

How far are we from the crash?

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Comments welcome at Vicky.Bahl (at) Gmail.com

(Disclaimer: views expressed in the article are those of the author, and they do not reflect in any way those of the institutions to which he is affiliated)

About the author:

Vicky Bahl is a strategy consulting professional based out of New Delhi and Mumbai, India. He has over 10 years of experience in advising companies on growth, innovation and transformation. He is currently working as an Associate Director with KPMG in India in the Customer & Operations practice.