Show me the Money

Ethics, Morals and Startups

?An old man once told, you need only two things in life to succeed, Hard work and Honesty. I smiled when I first heard him say that. I was young, brash, arrogant and felt that I was destined to have the world at my feet. Now 25 years later I am wiser.

Why did I bring out this point. When we train entrepreneurs in various aspects of building a Business, one of the key aspects that comes out is do Ethics and Morals matter in today’s world. In my humble opinion it does and more so in the world of Start Up Entrepreneurship.

A start up starts up as an idea. It moves to the next step with a prototype or a proof of concept. The next step is a working product being sold to customers and finally a successful business based out of that product. In every step there are challenges and in each challenge lies the temptation to take a short cut,

Idea - The Idea, the prototype and the Product market fit phase are some of the most grueling and gut wrenching phases in a startups journey. You will see it all, frustration, failure. Day in Day out one would be buffeted by doubts and financial stress. The only way to handle this phase is to be honest with yourself, your co-founder and stakeholders. Be honest about your fears, be honest about your financial position, Be honest enough to ask potential customers for help. The most honesty needs to go out to people who are your employees. They do not know the real status so keep them in the loop on all developments. Honesty in this phase will always pay off as people start building trust in you.

Product Market Fit : When we say do not take the short cut, we always mean do not swap your core Product Market Fit Parameters for Vanity Parameters. Customer Engagement on the App Matters more than the numbers of Customers coming to the app, Contribution Margin will always matter more than driving Gross Merchandise Value. When questioned and quizzed by the outside world, be humble enough to admit that there are points of opinions different than yours and they all matter. The world will reward patience and when you solve their problems financial rewards will follow. No amount of Financial Chutzpah will replace the ability to drive actual product validation by Paying customers

Initial Fund Raise : Bring transparency, allow your systems especially Financial Systems and processes to be audited. Ensure financial Transparency, you are only the custodian of the money that your organization earns not the owner. Ensure that Employees and Vendors are always paid fast. Do not lose their trust. Prepare a monthly Financial Statement and ensure that Investors are always update on the latest financial Metrics. I always advise have a strong external member in the board who goes through your Monthly Financials and who guides you on how to spend and manage your company funds wisely.

Success : The most difficult phase in a startups journey is when you start making money. This is not the time to believe that you have made it. This phase requires utmost humility in understanding how to drive the company to the next phase of growth. ?Surround yourself with people smarter than you, empower them to align with your vision, Be transparent with your investors and they will all help you drive business profitably.

Finally my mantra is define your stakeholders, be transparent with them, always share as much information as you are legally allowed and seek guidance. There is a premium for companies which are transparent so be that startup. Last but not the least, I remember an anecdote when a fairly successful businessman decided to go ahead with a transaction even though some of the external factors had changed. He felt it was his word and honour which was more important than any potential loss, even though he could have wriggled out of the transaction, “ Maine Zabaan Diya Hain” ( I have given my word). That man has been handsomely rewarded time and again and even when the chips are down, has never had any supplier, investor turn their backs on him, that is the power of Transparency and Ethics