Learnings from a Failed Venture

Reflections: “Demystifying” a Venture which failed to take off!

They say you learn more from failures than successes….

Yes! True to the core!

That’s precisely the insight that has been gained and reinforced over the last 6 months.

Like a typical action packed, gun trotting, Hollywood masala flick full of suspense wherein the audience is glued to the theatre seats with eyes and mouth wide open ( and the popcorn and Nachos box still untouched), this was a similar roller coaster ride for us which kept me and my team on our toes 24/7.

Alas! This suspense thriller lasted for hardly 6 months and left behind a trail of losses, valuable experience and a wiser and a relatively more matured entrepreneur!

Having had a respectable corporate world exposure of 20 years across geographies and multinationals (including a 12 year stint as a banker), I took a calculated risk of venturing out on my own a few years back. After exiting my first start up within 12 months, I founded a plain vanilla, conventional B2B Distribution House for Automobile Spare Parts, which has been successfully running for over 3 years now.

About 6 months back, an opportunity, a real mouthwatering one, came our way. One of the well-known startups (now a UNICORN) in the Automobile Industry was scouting for an exclusive vendor partner for their unique and innovative venture near Gurgaon. After a series of meetings and pitching and cross questioning, we decided to join hands. The excel sheet calculations turned out to be pretty impressive. The turnover and overall profit was way beyond my imagination considering all this was possible within a time frame of 18 to 24 months. Under no circumstances did I want to let go of this opportunity which had the potential to catapult me and my company to a different orbit.

One thing which I had learnt during my corporate world stint and from the multiple books that I have been reading over the years was that one should have the ability and the courage to think BIG….and this one was real BIG!

The journey began. Little did I realize that the reverse gear mode would be activated within 4 months.

Having signed the contract around mid-August’21, the whole project, along with the respective division, was wound up by the company around mid-December. “Zero to one to zero” in flat 4 months. Period!

There was not even an iota of regret in the words and eyes of the senior management while communicating the decision. The piercing words came out with a beautiful smile (pun intended). While me and my team were busy making pitch decks and meeting investors for fund raise, expanding team, setting up processes and systems, building up inventory, shuttling between Chandigarh and Gurgaon twice a week, it was a “matter of fact” decision for the principal company. By this time, the company too had invested a couple of crores which, they felt, was a part of the “learning curve”. Interesting thought process!

Over the course of last few months and after having interacted with multiple people from top to bottom, officially and unofficially, one thing which came out very strongly was that the investors ( VC’s) found the whole division and the project financially unviable which led to the calling off of the division. I wonder what calculations were done before starting the division in the first place and whether or not the VC’s were taken into confidence regarding this particular project and division per se….Or was it an eye wash exercise for some other purpose, it will always be a mystery for many. And I am no exception.

Having lost a considerable amount of money myself, the experience gained from this 4 month venture was of immense value and beyond comparison. In other words, this was a 6 month crash course of practical MBA (including 2 months of winding up of the project). I learnt more during this period of 6 months than what went inside me during my regular 2 year MBA way back in 1999.

The key lessons learnt were:

• The concept of “face value “doesn’t exist in the business world. Get your facts checked. Do the necessary research before putting in your ink on the paper. Don’t buy stories about what will happen tomorrow. No one has seen tomorrow. Do a thorough “reality check”. Future is speculative especially in cases where the concept itself is new, and especially, if you’re dealing with a UNICORN start-up. It’s a different ball game altogether!
• Be extra cautious while dealing with UNICORN startups. In one of the unofficial meetings, it came out that this particular division had been sanctioned an unlimited amount of money by the founders to experiment. In other words, “Jaa Kiran, jaa… jee leh apnee zindagi” types. I wonder what would Amrish Puri have said when he found that his daughter Kajol had lost a couple of crores while “experimenting and playing”. Careful, please!
• Do not compare your entity with a VC funded UNICORN where the concept of profitability does not exist for the first few years. It’s an altogether different unconventional world. Better not be lured by the billions and millions. After all, these are all zeros on paper and being funded by overseas investors. While it’s your own hard earned money. Everyone seems to be experimenting. Your entity might not have the bandwidth and the capacity to “play around” with a few millions. Reality check!
• Don’t be hyper excited to sign and get started. Hang on. Have patience. It may be a matter of life and death for you and your company but for the UNICORN, it’s a routine “EXPERIMENT” and even if it fails, life goes on for them. Maybe not for you!
• Starting the project with half or nil preparation is suicidal. Get your manpower, infrastructure, systems, processes, inventory in place before the race to victory begins. And if pressurized by the Principals, have the courage and the audacity to say “NO”. Do not fall prey to false verbal promises that everything will be sorted out later. No. Put your foot down and refuse to bulge even at the cost of losing the opportunity. Put everything on paper before starting. Verbal commitments have no relevance irrespective of whosoever has made them. Remember, face value has no relevance. Its money, honey!
• Insist for weekly reviews with the top brass. Use your intelligence and your gut feel to get a sense of what’s happening behind the doors. There is lot of truth behind the saying “Jo hota hai, who dikhta nahee…jo dikhta hai, who hotaa nahee”. Careful!
• Go slow. It is important to dream but with your feet on the ground. There is no point dreaming about a BIG picture when the management of your partner company is planning to call off the project and the whole division thanks to their own miscalculations. Don’t fall prey to the picture being painted by the media. Remember, the media too is hungry for stories. At the end of the day, you never know, you may end up becoming a story for someone whereas the UNICORN in question was experimenting all this while. You may be the “product” per se in the overall scheme of things. Keep your eyes and ears open and mouth shut!

The experience gained was of immense value. Am sure the next time I enter into a contract or partnership with a new entity (irrespective of the size and profile), my learnings gained from this venture would help me.

Here’s to a new beginning in search of newer opportunities while my existing business runs along!

(PS: The name of the principal company has been intentionally withheld so as to maintain confidentiality. The views are totally personal and nowhere is there an intention to malign the company or gain anything from this blog. It is a pure and personal perspective, and like all human beings who are prone to making mistakes, I am no exception).