THINKPRENEUR

What businesses do wrong and what we can learn from them

When was the last time you lied to someone? Was it because you wanted to please them with a fake compliment? Or just not hurt them with your original opinion.

An entrepreneur rarely becomes successful by listening to his/her intuition only. Instead, most successful business owners rely on a team of advisors, who are experts in their respective niches. Even if you end up disagreeing and making a separate decision, you'll have more information about the nature and possible effects of that decision.

Rejection hurts. Sadness hurts. Failure hurts; sometimes a lot. So what do you do?

You avoid getting hurt by deciding you no longer care. But then you never get to experience the joy of connection, the joy of happiness, and the joy of success.

Choose to still be in the game. Choose to care. Choose to live.

So, invite your friends to provide feedback on how you do business, and listen to what they have to say.

Have you ever been so excited about an idea that you pitched it directly to your friend after which they ended up nodding, and you ended up thinking you are the next Elon Musk?

Guess what- you are mistaken, you are trapped in the Mom Test!

A Golden Guide of questions and approaches towards conversations to make the base of your business idea so solid even your mom won't be able to lie, just to make you feel good. Hence, the name -The Mom Test. It helps you see through the lies, fake compliments, unwanted opinions and false validation to know what the real audience is thinking.

You- “Hey I have a business idea and I think it could make me a million dollars.”

Bestie- “Wow, let's mint money! ”

You- “We will sell water bottles for free to the people- you know how?”

Bestie- “Tell me how.”

You- “We will manufacture the bottle at an industry average of like 5-6 cents per bottle and then we will stick labels of brands who want to advertise their products through our bottle- we will charge them 10 cents a bottle and the margin is all ours.”

Bestie- “That sounds too good to be true. “ 

Guess what- you passed the Mom test and congratulations you were able to deceive yourself into believing that you are the next startup guru.

Rather than pitching them the idea, try knowing more about their problems and what they face in everyday life. Let us see the different side of this conversation with your friend, where you put your ego aside and don't act like your business idea is your child.

You- “Hey- do you think water bottles that you buy for like 20 cents should be free of cost?”

Bestie- “Yeah, if I can save money, then why not?”

You- “But what if you have to see ads on the bottle? Would you mind that- rather than having the logo of the brand that is selling you the bottle? Would you trade trust in the company for advertisement?”

Bestie- “ I just care about the damn water, as long as it's healthy it works.”

You- “What do you usually do with bottles that you drink from- the plastic ones?”

Bestie- “As it says - Crush the bottle after use.”

You see? Putting your ego aside by trying to pitch them the idea directly and making yourself feel good about being a think-preneur and trying to understand if the problem that your business is solving exists or if your mind has created some kind of a fallacy is a great way to build a strong foundation of your business.

With this conversation you know so many things like- your friend would not care about the logo till the water is clean, she crushes the bottle after use so probably recycling would work.

You- “Gurl, you know what? I got hit on by a guy today. I think he likes me.”

Bestie- “Oh did you know? What exactly happened?”

You- “He said I looked terrific today!”

Bestie- “Oh damn. He is really into you.”

You- “I know right !”

This is a classic example of a misleading belief. Words are misinterpreted by us for what they think they mean, according to our assumptions.

See how your bestie is feeding into your delusion that the guy really liked you but extensively he did not say anything like that?

That is exactly what happens when you tell your bestie an idea that you think tells you- “Hey I can turn you rich.” but all the idea said was- “Hey, I think I can be an idea worth working on.”

INDUSTRY INSIGHT

Covering the FMCG, Mutual Funds, E-Commerce, Wealth Management, Power Sector and Quick Commerce of India

In the year 2022, the steep drop in the revenue grossed in the FMCG sector of India was due to inflation.

Around 35-40% of the FMCG sector is affected by the rural households, inflation plays a very important role.

A sudden decrease in the purchasing power parity would mean that people who were first willing to buy are now hesitant.

 Trends In The Mutual Fund Industry Over The Years

As of March 2023 the AUM in the Mutual Fund Industry stood at US $482.40 billion and the total number of accounts stood at 145.7 million

The asset under management growth is expected to be 12 - 14% in FY 2022 and 18 - 22% between 2022-23

Inflow in India’s mutual fund scheme via systematic investment plans (SIP) stood at RS 1.5 Lakh Crores (US$ 18.09 billion)

Trends In The Indian E-Commerce Space 

India has over 900 million internet users, the second-largest in the world.

The Indian e-commerce market is expected to reach $350 billion by 2030.

In 2022, the Indian e-commerce market was valued at $60 billion, and it is expected to grow at a CAGR of 25% in the next five years.

The most popular product categories in the Indian e-commerce market are electronics, fashion, and home & kitchen appliances.

Social commerce platforms, D2C brands, and vernacular e-commerce are growing rapidly in India.

Trends In The Indian Wealth Management Industry

According to a report by Knight Frank, the number of HNWIs (High Net worth Individuals) in India is expected to grow by 63% to 11,198 by 2025. This growth will be driven by a number of factors, including the strong economic growth, the rising middle class, the favorable government policies, and the growing stock market.

HNWI households grew at an even faster rate until 2019, growing at a CAGR of about 21.5%. Advisory asset management and tax planning have one of the highest demands among wealth management services by HNWIs.

By the end of 2025, global HNWI wealth is estimated to grow to over US$ 100 trillion.

India is expected to be the world's 4th largest private wealth market globally by 2028

Recent Trends In The Indian Power Sector

The Indian Electricity Sector is likely to witness major transformation with respect to demand, growth, energy mix and market operations.

Demand for electricity is expected to increase - per capita consumption of electricity is estimated to stand at 1,824 TWh by FY27.

India has been witnessing a deficit in meeting the peak demand over the last two fiscal years.

The peak power demand in the country stood at 226.87 GW in April, 2023. The peak power deficit in India has been around 2-3% over the last two fiscal years. This means that the country has been unable to meet the full demand for electricity during peak periods.

Recent Trends In The Indian Quick Commerce Space

Revenue in the Quick Commerce segment is projected to reach ₹128.80bn in 2023.

Revenue is expected to show an annual growth rate (CAGR 2023-2027) of 52.79%, resulting in a projected market volume of ₹702.00bn by 2027.

In the Quick Commerce segment, the number of users is expected to amount to 52.1m users by 2027.

User penetration will be 0.9% in 2023 and is expected to hit 3.5% by 2027.

The average revenue per user (ARPU) is expected to amount to ₹9.61k.

In global comparison, most revenue will be generated in China (₹5,493.00bn in 2023).

HOT OFF THE BOARDROOM

Stories of the Hottest Startup Ventures Around the Globe

WeWork is not working anymore

Intro

WeWork, once hailed as a symbol of the modern workplace revolution, embarked on a meteoric rise that seemed unstoppable. Founded in 2010 by Adam Neumann, the company promised to redefine how we work, offering flexible office spaces and a vibrant community for entrepreneurs, startups, and established corporations alike. However, the WeWork story took a dramatic turn, going from being a $47 billion unicorn to a cautionary tale of corporate excess and overvaluation. This article explores the rise and fall of WeWork and the lessons it offers in the world of entrepreneurship.

THE RISE

The idea behind WeWork was simple: rent out office space, give it a makeover to look cool and modern, and then offer it on a flexible basis to a wide range of customers. But WeWork wasn't just about office space - it was a lifestyle brand that encouraged collaboration and innovation between its members. It was all thanks to the charismatic CEO and co-founder Adam Neumann. He had a vision, and it was reflected in the company's branding, which included the names "WeLive", "weGrow", and "weWork". WeWork's success was made even more impressive by its rapid growth - it went from just one office in New York to hundreds in more than 100 cities around the world in just a few years. Investors were in love with WeWork and gave it sky-high valuations.

THE FALL

In 2019, when WeWork filed for an initial public offering (IPO) with the SEC, the company was in a lot of trouble. It was losing billions of dollars a year, and there were questions about how the company was running things. People were talking about Adam Neumann's shady behavior and how he had too much power over the company. Eventually, the IPO was called off and WeWork's stock tanked. The company was no longer just a "unicorn" - it was seen as a sign of corporate greed, bad management, and too much money being made. Neumann was fired as CEO and got a huge golden parachute worth millions of dollars.

LESSONS FOR ENTREPRENEURS

1 Profitability matters

WeWork's rapid expansion strategy prioritized growth over profitability, a decision that ultimately proved unsustainable. Entrepreneurs must ensure their businesses have a clear path to profitability.

2 Corporate Governance is Key:

WeWork's governance structure allowed its founder immense power, leading to questionable decisions. Entrepreneurs should establish a balanced governance framework that prevents undue influence.

3. Be Mindful of Hype

WeWork's valuation was inflated due to hype and overzealous investor sentiment. Entrepreneurs should be cautious about relying too heavily on external funding to justify their company's worth.

4. Adaptability and Flexibility

The COVID-19 pandemic exposed the vulnerability of WeWork's business model. Entrepreneurs should be prepared to adapt to unforeseen challenges and diversify revenue streams.

5. Focus on Core Competencies

WeWork ventured into various non-core businesses like WeLive and WeGrow, which distracted from its core offering. Entrepreneurs should prioritize their core competencies before branching out.

CONCLUSION

The WeWork saga served as a wake-up call for both entrepreneurs and investors. While the company’s success demonstrated the potential for innovation in the workspace space, it also exposed the risks of unchecked growth, excessive valuation, and corporate mismanagement. Aspiring entrepreneurs can learn from the lessons of WeWork’s success and failure, and strive to balance ambition with responsible business practices to create long-lasting, sustainable businesses.

KEY TAKEAWAYS

“Past behavior is the best predictor of future behavior”. It’s advantageous to try and extract insights from others in terms of - “what was their behavior in the past” and then assess the market, rather than blatantly seeking feedback on your ideas/features. In this way, The Mom Test safeguards you against fake and biased answers.

“The devil is in the details”. Oftentimes, we tend to gauge a company’s progress by its flashy valuations and never-ending fundings. But, it’s always helpful to think from first principles. Is the management good,Is the company overvalued , Is there a need for their product anymore? etc. Recall WeWork’s example from above.

“Trust and transparency go hand-in-hand”. It is important to be ethical in our objectives. Otherwise, nobody would want to line up and work with us. If we win their trust, we have their everything.