Calvin & Hobbes revisited to a Startup Narrative
In the startup space, building great relationships is nearly as important as creating smart new products. And as many would tell you, forging a strong bond with your investor is the most important of them all!
While I may not subscribe to the entire premise of that notion,
One can't deny that investors are indeed quite instrumental to the journey of a startup founder.
In fact, I sometimes feel that their relationship mirrors the highs and lows of Calvin and Hobbes, my favourite comic strip characters...
Calvin, a little boy, voices the naiveté of a passionate founder, and
Hobbes, the tiger, plays the wise old investor, never to be found without a philosophical quip or two.
Sometimes existential, sometimes playful, the two run into frequent conflicts. At the end of it all, however, there is always a lesson to be learnt.
Once upon a Time…
Entrepreneurs typically start out just like any other layman, going to schools and colleges, and training for a conventional career. In fact, before starting out with an innovative new business, many of them even work in day jobs. While many of these jobs are often dreary in their monotony, they are usually enough to sustain affluent lifestyles, and get them through life.
But, for some restlessly ambitious men and women, this is hardly enough. They are not happy with a job that just pays the bills, they want more!
For fiery innovators bubbling with an entrepreneurial spirit, it feels like a waste to labour through day jobs, when they could be writing their own growth story. This is typically the time they begin to consciously ideate, and think of interesting new concepts to work on.
As aspiring entrepreneurs begin to think of ideas to work upon, they often paint fantastical pictures in their head about what their dream startup would look like.
They are all out to leverage the tech trends and churn out the hottest new products, so sometimes their ideas can get a tad too overambitious, futuristic, or downright impractical!
This phase may feel like a waste of time, with unnecessary hours spent on hammering out silly ideas.
But they serve their own key purpose; they stimulate the brain and get the creative juices flowing.
And then, after a hundred odd impractical ideas, a founder finally hits the nail on its head!
Once the founder has decided on a great idea to form the genesis of his or her dream startup, it is time to get to work.
This is one of the most gruelling phases of building a new business, because it involves clarifying every little detail in order to flesh out the idea in the founders' heads.
From researching to scouting for resources, getting permissions to testing out the idea first, this stage sees founders running helter skelter to get their startups off the ground. There is little time to sleep and eat, let alone to socialise! If the founder can spare a few seconds to think about anything other than the startup, he or she is probably wishing for 30 hour days!
The immense hard work that founders typically put into their passion projects go on for days and months, and sometimes even years, with little time for them to catch a break.
After the founder has put a team together and figured out the basics like target audience, pricing, permissions and more, it is time to keep hustling. There are rectifications to be made to the business plan, strategies to be formulated, resources to be procured and follow ups to be done!
These days truly test the brain power of overworked founders, as they try to balance a million different things at once!
Every journey is full of ups and downs, and a startup founder's road to success is no different. It is a rollercoaster ride to the top, peppered with crushing disappointments and dazzling successes along the way.
Creating a new business takes time, and the results take even longer to show up. Sometimes, after months' of hard work and preparation, when the plans don't go according to plan, it can make the founder hit rock bottom.
The rock bottom can continue till the founder is finally able to see the flickering light at the end of the tunnel. Depending on the type of the business, and the issues plaguing it, it may finally be time to acknowledge that the startup needs an investor!
For startups requiring heavy capital investment, landing a great new investor is usually the point where it all begins to make sense again! If not for anything else, then at least for the sense of success that accompanies a final deal.
However, just bagging an investment deal isn't all it takes to build a successful business, even though that's what it may seem like in the first few days. Initially, when the startup founders finally get all that money wired to their account, it feels like they are all set to conquer the world.
With money in the bank, and an experienced investor at their side, founders feel flushed with confidence, ready to take on all their competitors and ride the wave to success. This is the time they have to translate all their plans to reality, and capitalise on the growth opportunities as much as they can.
Of course, the infusion of funds into a startup is almost always associated with the onset of success. It is as though that having boatloads of cash is enough to ensure that the startup never runs into troubles ever again.
But, if that is true, how does one explain the cases of big shot unicorns like Uber and WeWork?
They all had a rich investor to cut them hefty paychecks, and had massive resources at their disposal. Yet, all that money, and more, were not enough to stop them from faltering along the way. Sometimes, investors, especially those like SoftBank, flush their startup founders with more cash than they know how to do with. And then, almost like little children overdosing on candy after getting their hands on too many of them, these founders go down the path of financial haemorrhage.
After all, there is a cost to doing nothing too, whether they realise it or not.
As the investor comes on board, and the founder finally sees a way to execute all the grand plans, it initially feels like all the hard work is finally paying off. This is the dream phase of the startup, a.k.a., the honeymoon period.
Every founder wishes that they could hold on to this time forever.
But at the initial stage, there are bound to be at least a few instances when a founder will stumble and fall, before seeing the face of sustainable success.
Often, these failures come from inexperience and naiveté.
Founders are typically newbies on the business scene, working hard to give shape to the brilliant idea that set their business into motion. So often, these inexperienced, yet passionate entrepreneurs find it hard to deal with the disappointments that inevitably come with working within the startup ecosystem. When these challenges come their way, and nothing seems to go right, a strategic partner, or a helpful investor comes to their aid.
As governmental policies change, an unforeseeable issue crops up, or the business simply does poorly in one quarter, it is an experienced investor who turns into the reassuring friend. Like Hobbes, an investor with keen knowledge of the space, can egg on the founder to keep working at it, because a rainbow is sure to appear on the horizon.
Although some investors can play a crucial role in backing a founder's vision, there is also ample opportunity for things to go wrong. While great strategic partners can be extremely supportive, not all founders are made of the same grain. Sometimes they ask for too much in too little time, and push the limits of the founders way too hard.
One only has to take a look at SoftBank's portfolio companies to know what happens when investors set the founders on a path of heedless lust for growth. Sometimes, the investors simply pressurise the founders too hard to generate profits quickly, and the burden of balancing a declining cash flow with investors' demands, drives a founder to the edge!
Even though problems are inevitable in the relationship between the investor and a startup founder, there are many who manage to sort through the mess. If the investor and founder are both committed to making the business succeed, they are likely to find a middle ground.
There are bound to be places where the two clash: the optimistic hope of a founder with the prudent caution of an investor.
Often, the end goals of the two can differ too. But as long as the founder and investor are both willing to make a few changes to turn the business into a resounding success, the partnership can yield lasting results. After all, when you have a partner by your side, who has taken the ride with you on your path to growth and development, things are likely to work out.
Once the details are all worked out, and the loose strings are tied up, it is time for the investor-founder duo to enjoy the spoils of their success.
Few founders reach this stage, but for the lucky few who do, the moment is nothing short of rewarding. With the able guidance from investors egging them on, the founder finally steamrolls all competition, and emerges victorious.
This is the pinnacle of the founder-investor relationships, but it can also serve as a launching pad for them to conquer newer heights together.