‘If you are passionate about what you are doing, the money will come,’ says author Dhruv Nath
Dhruv Nath is the author of The DREAM Founder: Creating a Successful Startup. The 240-page book is written in an engaging storytelling style, packed with frameworks, case studies, and even humour (see my book review here).
Dhruv is a professor at the Management Development Institute, Gurugram. An IIT Delhi graduate, he is also an angel investor and a director at Lead Angels. He was earlier SVP at NIIT. He is the co-author of Funding Your Startup (see my book review here).
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In this in-depth interview, Dhruv shares success insights on startup scalability, corporate accelerators, and entrepreneurship education strategies.
Edited excerpts from the interview:
YourStory [YS]: What are the key metrics startups should focus on in early, mid- and scale stages? What are the advantages and limitations of such measures?
Dhruv Nath [DN]: Essentially, there are two things that are important:
1. Are you getting paying customers and are they coming back?
2. Will you make money at some stage?
For the first one, startups should monitor the number of customers, revenue, and repeat customers. They should also track the growth in these figures, month-on-month, quarter-on-quarter.
For the second one, the unit economics (gross margins) and cash burn are key. We do not expect profitability early on, but gross margins need to be positive–so when you hit a large enough number of transactions, your total gross margins would exceed the overheads such as salaries and rents, and therefore the company would become positive.
At the same time, cash burn is also important, because if that is out of control, you are constantly dependent on external funding.
[YS]: How was your book received? What were some of the unusual responses and reactions you got?
[DN]: Fortunately, the response to this book has been as positive as the earlier one (I was concerned, since sequels sometimes tend to be a comedown). Amazon rating remains at 5.0, and in the three months since its launch, the primary sales are at around 3,000 copies. For a brief period, the book was at No. 1 among “Hot New Releases” on Amazon.
Some interesting reactions:
- I felt like your book was talking to me
- It was as though someone was sitting next to me and telling me what not to do
- No B.S. (Bullshit 😊😊).
I think the most satisfying thing for me was that many people have said they felt like I was talking to them. I like this style of writing, and fortunately, readers have liked it too.
[YS]: Did this book fill a gap in your previous book? What’s the flow between them?
[DN]: Yes, absolutely. The first book, Funding Your Startup: And Other Nightmares, was on the specific subject of funding, whereas this one is on everything else a founder needs, such as attitude, marketing, execution, and building a team.
The two books complement each other, although my PERSISTENT framework naturally appears in both. You can actually read them in any sequence.
[YS]: Are founders too busy to read books? Are there enough free resources and short-form content online that substitute for books like yours?
[DN]: I don’t think founders are too busy they are willing to read books provided they get value. Yes, there are a lot of good resources available on-line, and it is always good to keep yourself up to date. However, I think there are two major reasons why my books have been accepted.
First, both books have created frameworks which give founders a way to evaluate themselves and their companies–PERSISTENT and DREAM Founder. Evaluating your business within a framework, especially when you have several examples to help you, is always useful
Second, I think the big takeaway in both books is the stories about failures–most founders who have interacted with me have told me that everyone talks about success stories, but failures are hard to come by–and these stories have told them what not to do.
[YS]: You mention that founders should be articulate and good communicators. How can introvert founders take on such roles?
[DN]: Not easy, but there is only one way: Do it! There is a message in my book: You don’t know how to sell? Do it! You’ll make mistakes and learn as you go along. But don’t avoid doing it.
[YS]: In the time since your book was published, what new examples have you come across of founders who thrived during the pandemic–and those who perished?
[DN]: Interesting question. Actually, the pandemic has really separated the men from the boys. There were lots who folded up, but there were some who pivoted and actually converted the crisis into an opportunity–and those are what we call Lambi race ka ghoda. These are the guys who investors would love to have in their portfolio
For instance, we have an interesting startup called TRACKNOW, which was started by Ahmedabad-based Pooja Khemka. It was in the business of tracking school buses through GPS, so both parents and school authorities could keep track of kids. However, during the pandemic, schools were closed, and therefore this particular business came to a grinding halt.
Pooja then pivoted and used the same technology to track ambulances as well as vans for construction workers. Thereby the business remained alive, and now that the pandemic is on the downswing, school bus tracking is back, so she now has three lines of business.
[YS]: Many MNCs and large firms are courting startups through accelerators–what are the opportunities and challenges in this approach?
[DN]: This is great, for three reasons. First of all, these large companies are not financial investors. They are in it for the long haul. They are trying to locate startups in their area of interest. Startups that could potentially become an extension to their main business.
The other benefit is that the startup gets support from the larger company–which is not just financial. Finally, in case the partnership goes on beyond just the accelerator program, there is huge synergy for the startup.
Honestly, I do not see any significant challenges here, apart from the fact that the level of freedom the founder may have enjoyed earlier could be curtailed, since the larger company would have its own objectives.
[YS]: A number of colleges and universities are launching incubators for startups as well–what are the success factors for faculty to step beyond research and teaching, launch spin-offs or mentor founders?
[DN]: I think the best model is where the faculty, students as founders, and alumni work together. In most colleges, you have a lot of alumni who have become successful founders, and these people are very keen to build their alma mater. After all, it only adds to their own brand.
Faculty can provide more regular inputs, since the alumni cannot be present on campus all the time. However, it cannot be all faculty members–only those who have a strong interest in startups, and are willing to be actively involved.
I would also suggest that faculty be allowed to take small equity stakes in the startups they mentor–to ensure that their interest remains alive.
[YS]: How seriously are founders taking environmental and social responsibility in addition to business goals? What are some good examples you have come across?
[DN]: Many founders are taking such issues seriously. For instance, many startups promote the fact that their products are bio-degradable. One startup I met recently in Assam, makes furniture that looks like wood but is actually made of bamboo–which apparently gets replaced in four years, as against trees which take about 20 years.
However, the key issue is that sometimes these products are more expensive than others, and the question then is whether or not customers are willing to pay an extra bit to save the earth.
[YS]: How important is it for founders to achieve massive scale, or is there value in sticking to niche markets?
[DN]: I think this is a personal decision that each founder needs to take for himself or herself. You can be a small player in a niche market, not grow much, and still be very profitable.
A simple example is a kirana shop–completely non-scalable, but highly viable. That’s fine, provided that’s what you want to do.
[YS]: What trends are you seeing in the rise of startups for Tier II and III cities and smaller towns and villages? How can this be accelerated?
[DN]: This is the next big thing. I strongly believe that Startup India will be upstaged by Startup Bharat.
Many businesses are close to saturation in our metros, but smaller towns and villages are hungry for more. Investors like me are actively looking for opportunities here. I’ve recently been to Surat, Bhubaneshwar, Guwahati, and Indore, and I was amazed at the opportunities there.
I believe the only thing that is required, is for founders from the hinterland to come to our metros from time to time, and attend startup events where they will meet potential investors. It’ll be a win-win, because each side is now looking for the other!
[YS]: Do you see a need for creation of a ‘Startups Association’ for Indian founders, like NASSCOM for the IT services sector?
[DN]: I think there is already a fair amount of action in this direction. TiE is extremely active across both large and small towns. NASSCOM has a project called 10,000 Startups. We don’t need more associations – we need more and more founders to join and benefit from such initiatives.
[YS]: Would you say the startup movement has reached a tipping point in India, or is there still a way to go for mainstream acceptance and support for startups?
[DN]: Absolutely. Just go to any college–you’ll find half the students working on startups. Even the older generation (parents) are quite happy to let their kids work on startups.
I think this is largely linked to risk aversion. My parents’ generation was extremely risk averse – and government jobs were a kind of panacea. Our generation is less risk averse, so lots of my colleagues have started off on their own. The younger generation has absolutely no issues taking risks!!
[YS]: Are there plans to launch an online companion for your books, with useful resources for founders?
[DN]: Not at present, but it’s an interesting thought.
[YS]: What kind of founder activities are you involved with these days? What’s a typical ‘day’ or ‘week’ in your life like?
[DN]: Lots of physical seminars (now that COVID-19 is thankfully over), webinars, writing books, articles, and lots of mentorship as well. It is all great fun and terrific learning–I never thought I would be learning so much from young founders.
[YS]: What is your next book going to be about?
[DN]: Interesting question–the next one is a book of pure humorous short stories about life in a small town in the hills. A kind of autobiography, since that’s where I grew up. No connection with startups. Once I’m through with this, I get back to startups! 😊😊😊
[YS]: What is your advice or tips for startups and aspiring entrepreneurs in our audience?
[DN]: Don’t worry about failures. As long as you learn from them, the next time will be better. It’s when you don’t learn from them that the problems start!
[YS]: Any other parting remarks or words of advice?
[DN]: Chase your passion. Don’t chase money. If you are passionate about what you are doing, the money will come!