Controlling one’s destiny meant doing the right thing for the right reasons.
On April 1st, 2021, kPoint will complete 10 years. That is quite an achievement for a company that still calls itself a start-up! kPoint was incubated by GS Lab and after gaining customer traction, it became a separate company, needing to stand on its own. On this occasion, there is much that can be written about. I could write about the 3 founders – Shridhar Shukla, Atul Narkhede, and me or the leaders of the founding tech team Avijit Sen Mujumdar and Manish Sapariya. Or, I could write about what the product does, how it was originally conceived and evolved. Or, even about some of our customers. But, you can read all of it on our website. On this occasion, I would like to write about controlling one’s destiny!
To us, controlling one’s destiny meant doing the right thing for the right reasons. One of the biggest causes of friction in building a company is a misalignment of interests between the company and its investors. So, a critical question that a start-up needs to answer is how to capitalize it. Broadly, there are three ways to raise capital – self-funded or bootstrapped, funded with revenue and, with capital from angels and/or venture capitalists (VCs). These two articles, 1 & 2, summarize the differences between bootstrapping vs venture funding well. Companies funded purely through their own revenue from the beginning are rare and usually need some luck to have to paying customers before a product or service is delivered. Product companies and services companies are distinct in their funding requirements in that product companies need capital upfront to build at least an MVP before they can even hope for a product-market fit, let alone serious revenue while services companies can throttle their growth to limit capital requirements in most cases.
While starting kPoint, we had three things going for us – experience in running companies, being in a technology space we had expertise in, and some capital of our own.
By the time kPoint was formed, I had already started three different companies each with a different model for getting capital – we tried but couldn’t raise any capital for the first (it got acquired well before we could reach scale), raised about $25M for the second from venture capitalists (acquired after 5 years), bootstrapped the third (to substantial profitability). The first two were product companies and the third provided services. My kPoint co-founders also had experience with raising money and bootstrapping. When starting kPoint, we had three things going for us – experience in running companies, being in a technology space we had expertise in, and some capital of our own. We could fund the company entirely by ourselves but serious thinking was needed to figure out how and why.
There are a few factors that went into our thinking about funding but the clincher for us was the strong desire to control our destiny wherever it may lead us! My experience with VC funding was that the companies have a finite time to be successful and that works well for companies that time the market well. This doesn’t work so well for a large number of companies that have a short runway to try out different things to find the right product-market fit. Once the runway runs out, changes are often sudden and unproductive, wasting all the experience gained while spending money.
We made a conscious decision to bootstrap the company through revenue and self-funding.
We also had a burning desire to make a product for the Indian market and, at the time, venture focus in India was largely on B2C companies (there were indeed several Uber competitors funded in India before Uber came to India!). Similarly, the Indian market was somewhat slower in digital transformation compared to the western countries which, we reckoned, gave us more time. Lastly, we already had some revenue at the time we spun out of GS Lab so our need for capital was low. We made a conscious decision to bootstrap the company through revenue and self-funding.
Once we sorted out how to fund kPoint, we needed to get to the business of finding the right product-market fit and scale. Very early, we found a very large customer who not only bought the product but also was instrumental in evolving it in the direction they needed. They were a leader in their space and their suggestions or arm twisting was beneficial to us and our other customers. Our technology continued to evolve, solving new problems in our space while continuing to scale the business. They challenged us, pushing us to our limits to deliver a robust product. This process has continued.
We made decisions, good and bad, completely focused on our customers and the market and our people and not on what attractive story we could come up with for our investors.
It would be disingenuous to say that everything has gone well or even smoothly. We hit several bumps and crossroads along the way. For example, since revenue was a focus for us, rather than acquiring customers at any cost, we often had to choose between being customer-driven or market-driven. Limited capital meant not being able to experiment much which resulted in the product-market fit taking a lot longer. For example, we had consciously stayed away from participating in the video conferencing market because it was crowded and expensive to participate in. But, perhaps, during the pandemic, it might have been an advantage. We are always in constant danger of drinking the Kool-Aid. But what mattered most was that we made decisions, good and bad, completely focused on our customers and the market and our people and not on what attractive story we could come up with for our investors.
We have been able to inspire, retain and grow our core team building an innovative and scalable product over the years.
So, what does it really mean to control one’s destiny? It means we control our actions and reactions. A start-up needs to focus on three things – people, the product-market fit, and cash. We were diligent in building a team with people who also inspired us. We struggled with a product-market fit while having paying customers and, since customers always came first, often customer priorities trumped market priorities. We could have done better to say no in some cases by evaluating customers’ needs against market needs more rigorously. We managed cash well but also allowed some people or experiments to linger a lot longer than we should have. The scarcity of resources sharpened our focus on the right things. We owned our successes and failures! We have been able to inspire, retain and grow our core team building an innovative and scalable product over the years. Going forward, we will continue doing even better with people, market, and cash.
In spite of kPoint being my fourth start-up, I am always surprised by the things I don’t know.
Overall, it has been an enriching journey. In spite of kPoint being my fourth start-up, I am always surprised by the things I don’t know. As they say in sports, each match starts afresh with past wins or losses not meaning much. We are looking forward to the next innings, playing each ball on merit!