I often spend my weekends meeting entrepreneurs and wannabes. It gives me great pleasure in learning from existing treps and sharing my learnings with the wannabes.
Of late I’ve noticed a trend that I feel is catastrophic for companies. While I am seeing this often now, I’ll share references from 2 companies wherein I’ve seen the companies for about a year now and hence mostly know them in and out. No, Niswey is not working with any of them.
Company 1:
The business: A unique E-commerce company. Unique in terms of value proposition for the customer.
The good things first.
Founders: I was thrilled by looking at the credentials of the founders. MBAs from the best possible university, globally. One of them even running a successful business since more than a decade.
Product: Brilliant! Doesn’t exist in India. Niche market but great scope, growing opportunity.
The business model: Fantastic! Can’t disclose anything more here, sorry 🙂
Revenues: Picking up quickly.
Looking at all these, one would easily say, yes put in the money, its safe!
So what’s the problem? People. In just over an year of operations, they had had 15 exits! The team size that day was 14. Of the people who exited, while most of them had good credentials prior to joining, some were performing great, some average and some below average. While performance variance was definitely a worry, the exit rate was alarming!
I was invited by their investors to have a candid chat. They had to take a call whether to put in more money and wanted to know my thoughts.
I told the investor, while business model etc is great, this is a BIG problem. If you can fix this, it will be great! In all a good business.
He immediately replied, “but what will a great business model do if there are no people? Who executes it? How does it grow? Every month we will be looking for replacements and then by the time they understand the business, they are already planning to quit.”
We discussed the people issue in detail, came up with solutions. They went ahead to figure out if they could bring in those changes, and I am guessing they did.
Company 2:
The business: A services company.
The good things first, again.
Founders: Too good! Different skill set, industry expertise and a couple of them with prior experience in building startups!
The business model: Great margins. Some really big clients in the portfolio assured they were profitable from month 1!
Revenues: First year is still not over and revenues are already a few (INR) crores! The team size is not even 15 so you can safely assume they are hugely profitable, unless they are screwing something really badly behind.
The problem: In one word, Culture.
Employees often take leave (mostly giving lame reasons). They don’t share responsibilities. In fact they don’t even take their own responsibility, forget the team. Day starts at 10.30 and most of them unresponsive after 6.30-7 on weekdays and always unavailable on weekends. No, am asking to work beyond 7 or on weekends but remember, this is a startup, you MAY be asked ‘sometimes’, and not even receiving a call can cause some issues sometimes, especially when you are in a client servicing business. They have an HR. No offences to HRs but hiring an HR where there are not even 10 people? Ask any founder and you’ll know why that’s a bad idea.
In short, a disconnected and disengaged workplace and no culture of responsibility or accountability. And as you would expect, exits have already started happening. If your first few employees are irresponsible, how will the next set behave! What culture will be built? And that leads to the obvious question: how will this company grow or scale up?
If you’ve ever been at a managerial position, you know that its your team that gets you the results, not just your plan/strategy!
Often I see this trend now, entrepreneurs tend to ignore the importance of having good people in their teams. Or if they have them, they tend to not take care of their motivation levels. Remember, money is never a motivation. While terribly low salary can lead to de-motivation but an excessive high salary can never motivate people. Take good care of your employees/team – they are the key to your success.
At the end of the day, its people who will make or break a business!