RIP Reports – Worldwide Failed startup trends

 

failed_startups_trends

Let me start this post by making a simple statement. By the time I would finish writing this post, around 11,000 new startup business would get added to this world. Must be wondering how I found that number?

According to a massive research study done by Global Entrepreneurship Monitor-

around 472 million entrepreneurs worldwide attempting to start 305 million companies, approximately 100 million new businesses (or one third) will open each year around the world. 

reynoldsInterestingly, Dr. Paul D. Reynolds, Director, Research Institute, Global Entrepreneurship Center also says,

The developing countries of Asia and Latin America are far ahead of Europe in starting new businesses, according to a recent survey of global entrepreneurial activity. But few start-ups have the potential to make an impact on jobs and growth, and a negligible number benefit from venture capital, with the vast majority reliant on informal funding. The 2002 annual survey by the Global Entrepreneurship Monitor (GEM) was carried out across 37 countries representing 92% of world GDP. It finds that 286 million people, 12% of the workforce in these countries, are engaged in starting or running a new business, implying a global figure of about 460 million. “We were quite shocked by how high the index is in the developing countries,” admits Paul Reynolds, the GEM project co-ordinator. “Only now do we have a fuller understanding that half of the people in many developing countries are doing it out of necessity because they cannot find work, and that is what drives the rate up so high.

Every now and then we keep seeing these lists on buzzfeed or twitter around “17 coolest startups that can change your life” (like this one) and I’m sure a lot of you feel wow about the whole concept of startups. But let me spoil your party, most of these startup companies typically die around ~20 months after their last financing round and after having raised $1.3 million.

Failed startup Companies By Sectorfinal

  • 55% of failed startups raised $1M or less, and almost 70% companies died having raised less than $5M overall.  Not a big surprise. Companies at the earliest stages are the most vulnerable due to limited financial runway, immature products and businesses and general uncertainty about whether the market needs what they’ve built.
  • In each year since 2010, 70% of all dead tech companies have been in the internet sector. This is hardly a surprise as within tech, a majority of funding and deals has gone to the internet sector and so it would follow that the sector would have the largest proportion of dead companies.  The % of companies dying within the internet sector has stayed relatively range bound over the last several years as well.

On his many failed experiments, Thomas Edison once said,

I have learned fifty thousand ways it cannot be done and therefore I am fifty thousand times nearer the final successful experiment.

Well, it seems a lot of our modern day entrepreneurs have taken that quote to their hearts.

The rate at which startups are failing is quite incredible. Media, quite literally has made the whole idea of startup funeral extremely cool. It is hilarious (even bizarre) that the failed entrepreneur wants to grab the same attention like a war hero. The irony however, is that the media (especially the social media) is happily obliging to do it. Public post mortem of a failed Startup seems to have become a general trend in the business circles. A lot of professionals find it intellectually stimulating to visit the #RIP sessions of the startups. 

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According to CB Insights report:

  • While the dead companies on our list raised $11.3M on average, the median funding raised which is a better measure in this case was $1.3M.
  • the average company dies ~20 months from its last funding round in the absence of additional funding or acquirers.

But the question which is bugging me continuously is,

Why do so many startups fail? 

Typically, there could be hundreds of possible reasons for a failed startup like:

  • lack of strong value proposition
  • high risk low return business model
  • longer sales cycles
  • non scalable, non profitable business

and many, many more. You could actually read about reasons of startup failure all around the web.

startups_failed_industry_Rankings

 

According to CB Insights, Death is not specific to a particular type of sector or industry. In fact, the companies on our dataset represent a fairly diverse set of subindustries.

Interestingly, in the following Ted Talk, Clara Brenner, Co-Founder of Tumml talked about why a lot of social startups face such high failure rates.

She has mentioned about the importance of seed funding & how it needs to be utilized in a startup.

Also, the relevance of Impact Investors to Urban Innovation startups can be co-related with the importance of finding the right investor that matches your company’s vision. 

Finding a right investor for a startup is nothing short of doing matrimony match making. A lot of the startups fail even after getting several rounds of seed funding because the investor does not show enough trust or faith in the founding team’s vision.  

How auto buyers make purchase decisions online

According to a survey conducted by Dimensional Research, an overwhelming 90 percent of respondents who recalled reading online reviews claimed that positive online reviews influenced buying decisions, while 86 percent said buying decisions were influenced by negative online reviews.

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Without doubt, we can now say that the conventional purchase lifecycle has changed (and continuously changing) with the ever increasing dominance (& relevance) of social media in our daily lives.

For those who are new to digital marketing, here’s a simple video that compares the purchase lifecycle back in 1990s vs 2014.

Unlike mediums like television or radio, internet audience can stumble upon your brand / product from anywhere. It would not be an exaggeration to say that the fortune of a brand gets decided somewhere between those never ending twitter feeds & Facebook timelines.

Take an example of car buying which is one of the most dynamic purchase life cycle concept in the modern day marketing.

Last year, Google Insights released a report according to which In-market auto shoppers are doing their digital homework. Auto video research is on the rise and mobile usage has increased 35% year over year. ( Read how digital drives auto shoppers in stores)

In this Google infographic, you can learn some of the automotive market trends showing how consumers use the web to search for and buy cars.

Google_Auto_Trends_Infographic_2014

 

Key Insights from the above Infographic

  • Digital Search & Product Reviews are becoming an integral part in the auto purchase lifecycle.
  • Auto shoppers checking for product videos & video reviews is on the rise year on year.
  • Smartphone is increasingly becoming an important platform using which auto shoppers are doing their research.
  • Online Video is becoming most critical content piece in the entire buying decision.

Why every startup badly needs a Chief Critique Officer

The concept of an opposition party in India is slowly becoming a nostalgic affair for the masses, media & political pundits (Read this: India’s missing opposition parties). While some of you may just say that current Narendra Modi government is the best thing happened to this country since 1947, I would like to add a bit of perspective to the whole situation.

As a startup consultant, I believe in sharing analogies with my clients & business owners that they could relate with from their surroundings. The current political environment offers loads of such learnings to upcoming & established startups & entrepreneurs.

Lets come back to the point of having a constructive opposition.

For those who believe that lack of opposition is the best & perhaps the only solution to all of our current issues, I want them to watch the below 2 videos:

First is a talk by Martin R. Schneider on Importance of Critics in Society.

2nd, is a video by Drew Lawrence on how to accept criticism:

Without doubt, India, with all its multi-cultural, multi-lingual & multi-everything, is an immensely complex socio-politico-economic landscape. As a head of the state, Mr. Modi’s role is not just to bring balance to the whole system but also keep the pool of ideas growing continuously.

Whether its a country or a startup organization, any idea gets validated only when it is constructively critiqued by the people other than the one who created it.

But it is easier said than done. After all, who likes resistance or criticism anyways? A lot of startups hire people whom they believe are “self motivated” and talented (but dumb enough) to follow their vision blindly (at times when there is no vision at all).

I believe opposition or critique is extremely crucial at each and every step, right from the point when an idea is just an idea to when it goes inside the execution box. For a government or a startup, it offers the opportunity to measure their ideas against reality or sometimes even outrightly avoid going down that path.

The current Indian government led by Mr. Modi may have won on high popular sentiment but the victory is at the expense of creating a world which is devoid of any opposition perspective which is not just counter productive for the present government but also dangerous for the nation.

In my opinion, the present government is nothing more than an overgrown startup company which has received too much of investment in the Round 1 itself and they don’t even know if their idea can generate the return on investment for the investor.

In this kind of situation, you would always need people around you who could genuinely critique you (even argue wherever required) so that the business does not go haywire.

Junxion is Hiring – Social Media Lead in New Delhi

Junxion brings together diverse groups of people to build communities, create economic opportunities and protect and steward the environment. In collaboration with our clients—diverse organisation in the business, charity, social enterprise and government sectors in North America, the UK and India—we develop innovative approaches that make the world a better place. http://www.junxion.com.

We are a 17-year-old mission-based company that works with Fortune 500 clients to small NGOs and charities, all to forward sustainability, social equity and the “new economy”.

Junxion is accepting applications for the position of Social Media Lead.

Who we’re after:

Someone passionate to bring about social change while being a part of a global purpose driven organisation. You are dynamic, full of clever ideas on new age online media tactics and love to write for a virtual audience. Analytical, creative and a strategic thinker—you know and believe in social media campaigns’ power to change the world.

You will bring your experience to an international team of communications and marketing experts and help promote various environmental and social issues.

Job Scope:

The Social Media Lead develops and executes social media strategies to reach and engage inuential, intelligent and global online audiences, encouraging them to participate in social change. They also develop compelling content, which is clear and impactful, pushing readers to share information online. They work very closely with a team of web designers and marketing specialists. Brand and publishing sector experience is a must.

Core Responsibilities:

  • Use innovative marketing ideas to design effective and insightful social media strategies and execute them using social media platforms
  • Develop powerful and interactive online articles
  • Create and manage community/group pages, regularly update them with relevant articles and moderate activity on such pages
  • Collaborate with web designers and leadership team in order to increase Junxion’s and its clients’ online presence
  • Conduct online social media audits, SEO/keyword research, competitive analysis
  • Excellent command of interpreting and analysing data
  • Have deep understanding of how community, content and social web align with business goals
  • Ensure Junxion’s social media activities are aligned with best practice

Skills, Experience and Education Requirements:

  • Bachelor’s degree in marketing, communications, advertising, public relations or English
  • Outstanding understanding of brand communications, especially within a web-related environment
  • 3-5 years of experience in online marketing campaigns, social media marketing, public relations, community management, online content management
  • Proven editorial content editing and copywriting skills with experience writing for the web and social media platforms
  • Adept with tools like Hootsuite, Radian6, Sprinklr, SM2, Simply Measured and Crowdbooster
  • Well-versed with intricate features and use of social media platforms- Facebook, Twitter, YouTube, Instagram, Pintrest, Google+, Tumblr
  • Understands web design, information architecture, web analytics tools and search engine optimisation
  • Values driven, with innate creativity and strategic thinking
  • Work independently and take initiative
  • Able to work closely with other team members
  • Extremely brand-aware
  • Communicate effectively, in both written and spoken English
  • Remain even-keeled and effective under tight deadlines

How to apply:

If you meet the profile above and would like to be part of our growing organisation, we invite you apply for this position to jobs@junxion.com. Please note in the subject: “Social Media Lead-India”.

Please submit:

  • A cover letter outlining your skills and involvement in your community and how you support different social and environmental issues
  • Resume
  • Links to websites/online campaigns you have worked on and a short 30-word description of your role on them

We thank all applicants for their interest but only those selected for an interview will be contacted. To learn more about our company, visit our website www.junxion.com

How to crystal gaze into your startup idea to attract investors?

If ever anyone ask me to describe our current era in one word, my reply would be “ENTREPRENEURSHIP” and I am quite certain that most of you would say “I agree”

A word, which has truly changed the complexion of our modern day global marketplace.

The world (as we speak) is no longer a bi-colored canvas of small & large enterprise companies. Every passing moment, some or the other person is creating the next billion dollar idea which could possibly cause serious disruption in the way we were planning our business.

While, most of us think (and some believe) that our idea has the potential to become the next Facebook, Google, Alibaba or Amazon but very few people actually spend time in crystal gazing into the idea’s future.

It is a lot like visualizing bond movie’s starting action sequence or planning your moves in the Chinese Checkers game. You go 3 steps forward in your head and get airlifted to see how the idea looks from the top.

Remember, the person who is investing his money in your business idea wants you forecast not just the profitability but also get him a sneak peek into the near & distant future. That’s why I said it is a lot like crystal gazing.

The exercise I personally recommend to every budding entrepreneur, is a lot like formula 1 race track simulation where the driver races the entire track in his mind just to get accustomed to the track.

As a startup business owner, you need to see every twist & turn (how you would operationalize the idea? what would be the day 0 of your new business?, from where would get that first deal? how would you reward your employees and make your customer your best friend? ) in your business idea even before you are actually in the race (acquire funding).

Some investor are not just interested in knowing how much return the business will offer, they are interested in knowing how will you do it? The return on investment is non consequential if the path to success is not carved out properly.

Since your idea is your dream, your need to bring your investor into your dream and that would be possible only when you have done some serious crystal gazing.

Remember, being a visionary is of no use if you cannot show the path to others.

3 digital planning hacks for making sales focused plans

I was just going through the recently published article Rethinking the media plan on afaqs.com, it was kind of a deja-vu for me. For a brief moment, I was teleported back to my day 1 of marketing class where the professor was talking about the book “Medium is the Massage” – by Marshall McLuhan ( the father of modern media theory ). Interestingly, McLuhan could see the integrated approach towards media (and communication) way before the modern digital world started to dominate our daily lives. 

Today, the lives of human race is shrunk within a 4.5 inch smart device which has almost single handedly transformed and re-conditioned our thinking patterns like no other invention in the recent history. It is time for media planners to rethink their approach towards digital planning. 

Talking from an Indian perspective, brands are increasingly moving towards more advanced planning methodologies. Where on one side, e-commerce has opened the floodgates for sales driven planning, traditional brand advertisers are taking baby steps to convert their all branding plan to sales focussed campaigns with a clear positive intent to drive more sales. Legacy FMCG Brands like Dabur (see Dabur Liveveda ), HLL, P&G, Rekitt & Benkiser, Nestle are investing heavily into performance driven SEO & SEM campaigns to drive higher ROI for their brands. Some of them are even building their e-commerce portals (which may be an overkill of the idea at the moment). Incidentally, the idea of running pure brand campaigns is long gone from the market.

Digital media planners must understand few core marketing hacks before making sales focussed plan for their clients. 

Understanding Integrated Market in Digital

The modern day digital planning is continuously evolving from the conventional eCPMs & eCPCs. With brands understanding the potential of online & mobile medium, they would push agencies to drive more business. In many cases, media planner might just become an extension of brand’s sales team. Though we always had CPA, CPL & CPS models under affiliate marketing but thats not scalable for all the brands. A brand which has huge presence across mediums like TV, Print, Radio, OOH ( somebody like Flipkart ) can surely hope for driving huge ROI in their online efforts. A digital planner need to really understand how the brand is using their messaging across mediums in order to cross leverage the impact & recall in online media. For instance, if the brand is using a particular type of communication in offline, the planner must contextualise the same in online to match the target audience.

Leveraging Google Search to reach Offline audience

It would not be incorrect to say that online habits are mirrored from offline behaviour patterns. A C-level executive of financial firm  would be an avid follower of CNBC shows, at the same time he would have moneycontrol.com, Economic Times, Financial Times bookmarked in his Smartphone browser. This was a very simple example, a complex example would be an adventure travel enthusiast playing a strategy game on his smartphone.

With google, you can open your imagination around a world of possible keywords which your audience may look for. As a digital brand planner, you must pass this intelligence to your media planning team as to what could be various categories of keywords in which your target segments may fall into. This clearly is mapping of one’s offline habits into their possible online behaviour.

Building digital plan to drive in showroom footfalls

It is a tendency of most of the agencies to fall into the trap of offering digital only plan to their clients, which at times may not be the best idea. Especially for the retail which is arguably the largest spender across all ad-mediums, digital only strategy is pointless if it cannot generate sufficient footfalls in their brand outlets.

With smartphones pushing the technology boundaries, it is now possible for the planners to build a online to in-store marketing plan. Here are some basic fundamentals and tips that can help any media planner to make sales & ROI driven media plan for their retail client:

  • Understand & define the brand audience they would like to drive to the stores. Throwing communication is wide open & hoping for someone to catch it may not be the right strategy in this kind of plan.
  • Find the right digital channels where you could possibly reach out to these customers. Email + Social + Mobile Search would be the best combo for such marketing activity. 
  • Use the map locator as the CTA for all your communication.
  • Make sure you put some coupon code everywhere so that you can track the effectiveness of the activity. 
  • Drive leads and send them SMS alerts along with the google map locator link of the nearby store. This works like a charm for any brand and can drive super quick sales conversions on ground. 

4 ways in which Digital Ad Sales can close more business

In my career, I must have interacted with 100s of ad sales professionals from around the globe, while some of them were my colleagues, others I’ve worked closely with as a client. Often the difference between a good, bad & ugly ad sales person is visible immediately after the first meeting.

With social media becoming one of the most sought after marketing platform, role of an ad sales person has become even more tougher as most of the marketing focus & priority has shifted to capturing social landscape through powerful audience engagements on Facebook, Twitter & YouTube.

Interestingly, even after a significant change of media landscape, there is tremendous opportunity for ad-sales teams to offer value to the advertiser. Lets not forget, most of the brand advertisers hate blindness when it comes to spending their marketing dollars and they keep on looking for newer avenues & opportunities to reach out to their target audience.

Besides having great client relationship skills here are few pointers that can really help the ad sales to make a strong business case:

Talk Marketing not Sales

Whenever you are meeting any brand or marketing person, do not start the conversation with your website / ad network / solution, instead set the context from how marketing teams are leveraging digital platform for achieving different metrics. Always keep a case study handy from a latest successful marketing campaign. Even better if your website/ product was part of that campaign. That gives you a connect or hook to bring your service / solution into the discussion without making it look like a cheap sales pitch.

Listen, not Speak

It is difficult for an ad sales guy but I’ve seen this on numerous occasions in my career, meetings where the client is talking 60% of the time are more successful compared to when the sales person is too busy delivering a never ending sales pitch. You have to find a way to bring your client into the discussion. Listening to your client will give you clues as to how to make your offering relevant to the client’s most critical requirement. Even more important, client would give you complete hint as to how they want the proposal to look like. Do not let your “typical” sales mentality rule over you. It is time to listen and not speak.

Know about your Technology

One of the reasons why digital selling has become increasingly difficult is because nothing remains constant in the digital world. Technology has made every strategy a perishable. So in order to be in the driving seat, you must know what is going on in the technology world. Keep an eye on the competition, has anyone launched an app in your domain, how popular is that app? How can a client use re-targeting in their campaign? Which ad platform offers best technology? Which campaign used technology in the best possible manner & how?

Often during the client meetings, you would see the conversations digressing into different directions, often technology becomes the topic of interest across brand & marketing teams. For someone who is not aware of these changes may just lose interest of the client very easily. Especially, when you meet your client in a third party event or seminar, your knowledge can really get you great clients for long term.

Learn to move on

Know when to stop chasing any client. Imagine, you’re after a huge account with big potential, and it seems like your solution is just what they are looking for. Yet, many times, a sure thing turns out to be a no-go. Digital salespeople waste too much time chasing what they think should be the ideal fit. Instead, focus on the clients who love what you’re offering, and build those partnerships. You never know; you might just find a winning approach for your client after focusing your attention elsewhere for a short time. Then you can go back to them later with a killer proposal.