What Can Cause Us to Fail

I was having a conversation with a friend last week when he asked me a seemingly innocuous question: What is the one thing that can cause us to fail? I thought for a minute and replied: Reliance on a single revenue stream. He argued that a business must have focus. My counter-point: At the early stage of a new industry, it is not obvious where the value creation will happen and what will be the dominant business model or revenue stream. In that scenario, one needs to be able to try out multiple different options and get quick learnings as to what will work and what will not. At that stage, it would be suicidal for a business to just bet on a single revenue stream assuming that is the only one which will work.

In our own mobility business,  we currently have two revenue streams: one derived from the audience that we have created via our SMS channels (SMS ads), and another from the technology platform that has been built (bulk push and invertising for enterprises). Both of these have helped us grow through the year. An exclusive dependence on just mobile ads would now have made the going tough for us as companies cut their media spends dramatically. Going ahead, there are a couple more streams that we need to explore: creating a cash balance for subscribers to pay for content and services, and white-labelling the SMS publishing, subscriptions and delivery platform for operators and others globally.

4 thoughts on “What Can Cause Us to Fail

  1. Isnt this the classic problem for a startup? The right balance between focus and revenue streams.

    In your case you have been able to bank roll this startup with prior successes, but for startups that are either bootstrapped or need to bankrolled by VCs.

    VCs/Angel in India aren’t mature enough to recognize the potential and invest in the ideas that would generate revenue. They want a revenue model upfront and running for already mature businesses like Matrimonial sites or Indian wannabes (Youtube, linkedin, et all).


  2. We in the past 3 years we have learn t rather knew it would be impossible to survive on a single sect of clients, we cater to corporates as well as retail customers (ISP). We as a company in the 1st year were totally dependent on our corporates to build a retail (broadband) business as the technology was expensive to just sell to a retail client.

    Eventually today we have a good spread of revenues with say a 65:35 ratio which would keep us a sail of if a few of our high paying clients go belly up.

    I think a classic example of this can be seen in the ongoing financial crisis eg, lehman and bear stearns both went belly up and the others were saved by banks which were commercial banks. I think eventually all the IB’s(Morgan…..) wanted to foray into being a commercial bank as the spread is larger and would help them in a fiasco such as this!

    Best Regards,

    Satyam Bachani.

  3. Well, I think it will be different considering the age. When you are young, you can think of an idea and put your heart into it. You can take that risk and if you fail you can very well go for working for someone. Loosing focus can be disastrous at that time.

    But, once you are established I do agree with you Rajesh. Also the ability to reinvent and remain adaptable constantly – which we human inherently loathe.

  4. @ Rajesh

    I completely agree with you. In fact i am glad that you put it forth (I don’t have to think hard to know that I don’t have a clear answer to this question myself). Irrespective of the stage of a company and the industry alternate revenue streams (apart from the dominant – read prevalent – revenue stream). What is more important is that you keep asking this question everyday.

    ‘Need is the mother of all innovations’ (my apologies, for tweaking the phrase, to the gentleman who created the original one) so if one feels the need intensely one will innovate and hedge the risk. The enigma here is that if you think you’ll think of consolidating 1 revenue stream and then look at other, by the time you realise the risk you are already too late.

    @ Arjun

    Even if you are a company focussed on a product line (due to whatever constraints) it isn’t very difficult to think and create differentiated offerings of the same product/service for different client segments (based on their identified needs).

    Hedging can come in many forms you have to choose which one suits you. But what will make it happen is how intensely you seek an answer for the Question in-question here.