SUMMARY
The year 2022 has been pretty harsh for Indian startups due to a global downturn, leading to a funding squeeze and massive layoffs
Marquee investors are encouraging startup founders to batten down the hatches and focus on cost-cutting to survive.
Kohli deep dives into startup culture versus strategy, talent acquisition and retention, and what the next 10 years will look like
“Culture eats strategy for breakfast,” said Manoj Kohli, Country Head of SoftBank India. “If your strategy is strong, but startup culture is weak, your strategy won’t succeed. But if your strategy is weak, and your startup culture is strong, you can still implement your strategy,” he added.
A piece of sage advice, considering the current startup environment.
After the giddying heights hit in 2021 driven by the FOMO-led funding run, 2022 proved to be a sombre year for Indian startups. Brought on by many macroeconomic and geopolitical factors, Indian startups across sectors felt the inescapable gloom and doom of the ongoing funding winter. As a result, marquee investors encouraged startup founders to batten down the hatches and focus on cost-cutting to extend their runway.
Watch Vaibhav Vardhan, cofounder and CEO of Inc42, in conversation with SoftBank India head Manoj Kohli on the state of the Indian startup ecosystem and other critical issues like startup culture, talent acquisition and retention and what the next 10 years would look like.
Of the many firefighting strategies adopted by startup founders, one that has drawn widespread flak is the sharp retrenchment across sectors. To date, nearly 18,000 startup employees have been laid off, and the exits may not be over yet. Incidentally, edtech has seen the most layoffs, followed by consumer services and ecommerce.
During the discussion, startup growth strategies were revisited to delve deeper into the crisis, and Kohli questioned whether indiscriminate talent acquisition by several startups had been prudent.
A veteran with 44 years of professional experience in manufacturing, telecom, renewable energy and digital sectors, Kohli said that hiring people must always be linked to a startup’s revenue.
“As (former) CEO of Airtel, I ensured that we hire carefully – maybe 10-20 people at a time depending on the work and the revenue inflow. Once the work picked up, we would hire the next sprint and so on,” said Kohli, thus preventing the need for mass layoffs.
“You are dealing with human beings, not machines. You can’t disappoint them,” he emphasised.
Once people are hired, it is the founders’ job to ensure that they nurture the talent and help them understand the startup’s mission and purpose to unlock profitable growth.
“Your mission and purpose must be understood by all employees, at every level,” said Kohli.
Given the raging debates over the Great Resignation of 2021 and the ethics of moonlighting (side gigs besides one’s regular job) in 2022, talent retention has also become increasingly difficult for founders.
“Young people don’t like a company that only works for profit. They feel a startup’s purpose should go beyond profit, it should be linked to society and community,” said Kohli.
“Also, young people want to learn at a fanatical speed. Founders must organise learning sessions for rapid development, or they will lose interest. Once you do that, the retention rate in a company will be far greater,” he pointed out.
But what if the employee still wants to leave?
“If somebody wants to go, let them go. Be respectful, and don’t force anyone to stay. Because that person is your ambassador,” he said. “Either that person will return in the future or tell 10 other people why they should work for your startup/company. Isn’t that great?”
Speaking of the future, Kohli said that the next 10 years would be a golden period for Indian startups and the economy as a whole.
That is not an exaggeration. India is home to the third-largest startup ecosystem, with more than 57K startups launched to date for a combined valuation of $450 Bn+, as per an Inc42 report.
Interestingly, the ecommerce sector can be looking at a $400 Bn market opportunity by 2030, while the fintech market is estimated to hit $2.1 Tn by that time, according to Inc42’s latest reports.
Additionally, Kohli believes that India’s talent pipeline is the best in the world.
“That’s why I want you (founders) to be very sensitive to talent and startup culture. The Satyas and Sundars (Indian-origin CEOs of tech giants Microsoft and Google-Alphabet, respectively) of the world are no exceptions. You will see many more in the next 10 years.”
