Nature is an open book that gives permanent lessons for everyone. It has its rhythms: the growth rates, the times to prepare the land and fertilize it, to cultivate, to water, to weed and let it grow until the time when the ear comes, which, when seasoned, are harvested.
Acceleration in any phase must be well thought out and monitored to avoid surprises, such as killing a plant or animal, as a usual consequence. With the progress in multiple aspects, especially in technology, the temptation to transfer it to the living systems, overcoming their pace of functioning as in nature, is undeniable. At a specific moment, someone spread the idea of making chickens give two eggs a day, artificially creating days of 12 hours with shortened daylight. Hopefully, it was soon abandoned as nonsense.
With the excellent start-up fever – they were forcing people to think well and focus on putting a good idea into practice – born in different fields: agriculture, in large numbers in the manufacturing industries, and, even more significantly in software applications. Here, a slight improvement leading to substantial leaps in the follow-up of operations results gives evident reductions in processing times. And the consequence is saving time on computer use and obtaining faster final solutions.
In December 2023, the Department for Promotion of Industry and Internal Trade (DPIIT) recognized 117,254 start-ups. Later, in May 2024, there were identified 107
unicorns (with a valuation exceeding $1 bn).
Several start-ups appeared to solve problems experienced in daily situations, which were frequently postponed because the need was not immediate or no one had thought of the right solution for it. When people saw that they worked well and were helpful, they generated strong support from the populations using them.
There has been a lot of talk about the train’s protection system called Kavach or Armour. “It is an automatic train protection (ATP) system indigenously developed by Indian Railways through the Research Designs & Standards Organisation (RDSO). The initial development of Kavach started in 2012 under the name Train Collision Avoidance System (TCAS), completed the development in 2022 and patented under the Konkan Railway Corporation” (Wikipedia).
“Kavach has been certified for compliance with safety integrity level 4 (SIL-4) operations. It has been promoted as the cheapest ATP system globally, costing roughly 50 lakh (five million) rupees per kilometre in operation, compared to about two crore (20 million) rupees worldwide. The Union budget of India for the FY 2022-23 allocated funds for the rapid implementation of Kavach across 2,000 km of track, as well as sanctioning its implementation along 34,000 km of track of the Golden Quadrilateral rail route, which will be operated by 2027-2028. B. Rajaram is the key person behind its development; he is also responsible for developing the Skybus Metro system, starting from scratch.”
We can imagine the strong sense of security this type of protection provides passengers, especially on high-density and high-frequency railways, as in India. All the related costs are highly justified to avoid the deaths and injuries of hundreds of people who need to travel. I asked myself why the Kovach was not fully used in the capillary railway system without delays.
On the other extreme of the spectrum, there is a need to avoid precipitation and prepare the ground well for quickly disseminating new ideas only after giving them time to try, apply and discover their actual value and the precautions to take, if any, in the most diverse situations.
It seems wise not to dazzle with speculative capitalists, who come to the author’s start-up with intentions not of helping to grow orderly but to obtain catchy figures to selfishly improve the valuation artificially.
Capitalists have profitability objectives, which can conflict with the owner’s intentions, who seek security in growth by providing a helpful service. A capitalist with liquidity wants to acquire an essential part of the stock and thereby increase the new Company value in excess. It remains to be seen whether it is the speculation to buy in the early stages and sell when the start-up is in the decisive growth phase. This is the precise way capitalists add tremendous value to their wealth.
What happens after the sale of an essential part of the stock, to find how to replace the shareholder who left, and the loss of value this can cause makes the author of the start-up focus on financial matters, detaching him from the original content and the way to make it effective and well understood and used by new customers.
The worst evil is when many VC-Venture Capital companies have made vast amounts of money and continue to be greedy to invest and make even more easy money.
Some VCs entered very populous and thriving economies, and at a particular moment, they invested in it, which later was highly valued, with the time of their permanence. A current example is that Masayoshi Son, from Softbank, continued to back Jack Ma as Alibaba blossomed as China’s response to Amazon. That decision was handsomely rewarded, with SoftBank realizing an incredible $72 billion gain on its investments in Alibaba over 23 years (Google, 10 Feb 2024). There is no doubt that money grows money in stability!
Many start-ups were born in India and grew very well. But some of them, at a given moment, entered an uncontrollable cycle with diverse points of tension. They quickly became overvalued by buyers who invested massive amounts, expecting to sell them well later, not for the good of the start-up, but for personal gains.
The intoxication provoked by the Company’s high valuation dispersed the attention from day-to-day operations, causing a loss of quality and, therefore, of customers. In the middle of a high-demand wave, it provoked the inevitable disaster. Some were already “unicorns”, and their valuation came down, and they had to reinvent and reorganize themselves, as if they were starting from scratch.
Fortunately, some of them could relearn and grow again, given the excellent quality and value of the base idea and the determination to recover. Companies like OYO in Hospitality and Nykaa came to my mind in e-commerce sales of beauty products came to mind.
Others were more fortunate and were bought by large multinational companies, such as Flipkart, which was purchased by WalMart Stores, to enter and progress in e-commerce. Maybe also learn from the vibrant e-commerce in India since there is a high propensity to buy impulsively and give back if it is unsatisfactory, which makes the buying volume bigger.
(The Author is Professor at AESE-Business School (Lisbon), at I.I.M.Rohtak (India), author of The Rise of India)
