Going bootstrapped is never a sexy option, but it might just be the right one. Having a strong focus on unit economics can drive a lot of “correct” business decisions. Of course the growth is bound to be slow (we’ve managed to do a 20% mom on an average except a few rough patches at Mirraw), but the growth is going to be reliable, real value growth.
The year was 2011. We had exactly INR 1 lakh in our kitty. With this minimal investment, we picked a vertical – “jewellery” and went deep into that category. After seeing growth for a year, we did a natural extension to “sarees”, “salwars” and other ethnic related categories while being focused on the same consumer. Returns from the sales were used as marketing fodder for the next month. Since then, it’s been a steady growth chart. And now, we will close the financial year at the INR 100 cr+ mark in total revenue.
Not sure how right or wrong we are, but this is what worked for us.
This is the single biggest thing and most difficult thing to achieve. In the initial days, it means doing a lot of things yourself, sitting in small cramped spaces and working 2 shifts. Being developers ourselves, we didn’t have to pay for a dev team for at least the first year. All paid service options disappear and you end up digging for all freebies, open source alternatives and you make it work. It’s funny to realize how much of that paid stuff you don’t actually need or you can easily replace with a free option.
A stage comes when you must get paid services. For us that stage came when we actually getting X number of customers and that service was required to improve it. We would justify the actual need for a service by offsetting it with actual revenue, e.g. paid hiring database is worth it when we had the need to hire 50 odd people in 6 months. In a funded mode of operation, you can fall victim to impulse shopping (we should get all the hiring databases out there, after all we need the best talent to become a unicorn)
That being said, investing in people is extremely important for a startup. Just that you look for real value for money in each employee.
ROI Focused Marketing, No Branding
A lot of paid marketing options keep coming up as you start growing. You can do print ads, tv/radio ads, sponsorships, exhibitions you name it. People are out there to convince you that putting up one hoarding will make you the next Amazon. Branding has huge value, but for us it’s always been hard to measure. And we have stayed away from hard to measure quantities as much as possible. We measure every aspect of our marketing efforts and branding did not fit into the equation in the early days. Every penny spent was recovered twice or more. This forced us to optimise our marketing campaigns as opposed to random scaling without a view on conversion factor.
Not having spare money to throw around makes you whet every decision thoroughly. We run a lot of small experiments, pick what’s working and then power that up. We do spend money now on branding, but only after due diligence.
Focus on Product
When you can’t find extra money to scale the next month, you have no option but to improve your product. Your figure out new use cases that the customer will like to have, new channels/options that are unexplored and new product categories to add to your inventory. Understanding user behavior using hard core data analysis can lead to huge wins. The progress would come after a slow 100 fixes and not after changing the color of a magic button.
The objective is to build some real value for the customer. When you have 1000 visitors on your site and only 5 customers from that, you are faced with two choices for scale. You can boost your marketing to get 2000 visitors and thereby increase to 10 customers, or you can try and understand what the 1000 visitors want, what exactly you are lagging behind and fix the problem to increase to 10 customers. The second option is harder, more time consuming, but definitely more cost effective and long term.
Like Minded Folks
We approached several marketing agencies for paid marketing campaigns, and none of them could deliver the ROI that our team delivers. They have all been spoiled by the market with their big budgets. We ended up building a strong cost conscious team that believes in structured cost optimised growth. Getting the right people on board is a key part of this strategy. Honestly, we find people more excited about the fact that we have a profitable growth as compared to just GMV. Every member of the team thinks of simple solutions/cheap alternatives to easy expensive ones.
Does this mean we don’t believe in funded growth? Absolutely not. Funding is required to scale a business fast. Our vision is to build a billion dollar business and that will not happen without funding. Before you seek funding you must ask what you need it for. Having bootstrapped it so far, we know exactly where we are going to channel our funds, how we are going to measure its returns, what choices will lead to real business growth.
Build a business first, get real customers, show traction and if you are able to keep growing at 20-30% month over month, continue doing so. self-sustained growth is a real value add for the business.