Overcoming the Hurdles of Scaling a Startup

In an exclusive interview with Industry Outlook magazine, Roopak Gupta, Founder of mTap Corporation, shares his insights on how numerous external factors influence the success and scalability of a startup and offers pointers to what founders can do from their end to maintain a good relationship with their investors. He is a seasoned entrepreneur and leader with a proven track record in building successful ventures and driving business growth. With a focus on making networking efficient, effective, and collaborative, he founded mTap Corporation in 2022. Under his leadership, mTap has emerged as a critical player in the field, utilizing his leadership, entrepreneurship, and digital marketing skills to establish a strong presence.

According to numerous studies, 80% of startups fail in India. What is your take on this?

Startups by definition are supposed to solve an existing problem when there is no existing solution. At their onset, they are bound to fail. Sometimes what they think is a problem might not be a problem at all. But most startups fail because they are not able to find a customer base which fits their product. It may be a great idea accompanied by a great product, but it fails if the customer cannot use the said product to solve their problem, or maybe the problem isn’t scalable.

The second failure factor is not building a capable team that can lead to success. For example, one can be good at coding, marketing, or whatever they specialize in, but this team has to be persistent. At the same time, they have to be nimble when pivoting to their initial idea. Most of the team dynamics that are not allowing them to pivot to that very idea of what the customer feedback is coming from are also major causes of the problem. The team dynamics have to be good for a long period of time. The initial phase is a struggle phase. There is no capital, and it is only the idea. 60+ work hours weekly is common. There is no family time. The social fabric is very fragile, which drives people to pessimism and to the edge of quitting. The social dynamics are also a contributing factor.

The third major factor which I personally believe is money. The common train of thought is money is the first and foremost factor, but you can only get the money if you have a solid idea and a product which is practical and a strong team to back it up, only then will you get the funding. A lot of startups fail on the funding side and then fewer are going to fail on the scaling phase of the startup.

What role do accelerators and incubators play in the startup ecosystem, and how do they impact the scaling journey of a startup?

Accelerators help you scale, while incubators take a raw idea and help the entrepreneur structure it. One of the biggest mistakes startup founders make is not getting their message across clearly. Can people read your message? Understand what you are doing before they are willing to sign up. Are they ready to spend their money on your product? If you have a customer and you operate a SaaS (Software–as–a–service) business, what is the churn? Are people leaving your business? If they do not have a positive answer to these questions, they are not ready to scale up.

When we are talking about scaling, the first aspect to be considered is the entry gate, are you ready to scale? Are you ready to scale from a product perspective? Are you ready to scale from a logistic perspective? Scaling from a Compliance perspective? Because as you scale you need to make sure you need to make sure you are managing your regulatory compliances, privacy rules and international compliances. All this needs to be accompanied by good HR policies.

The usual perception of scaling is always scaling only the product, but scaling comes across all components that are running the business. All nine blocks of the business model should be up for scale. In India, most startups are tech startups. When you are building a tech-based startup and scaling it, they prepare the product in a way that can be downloaded by 10,000 people in one second. However, they forget to scale the customer service perspective. A lot of times, we have seen a startup grow but tank due to poor customer service.

“Scaling is a process where the product comes first. If there is no product, you have nothing to scale.“

How do you navigate relationships with investors, and what advice do you have for startups seeking to build strong investor relationships?

Clarity and honesty must be prioritized by any investor. Make a clear, concise plan, schedule communication, and set expectations for it. Emphasize clarity on the communication, who your customers are, and what your growth plans are, and it is vital these are articulated well so that trust can be established. Trust is a byproduct of honesty and cannot be bought.

As a founder, you can be clear and honest in whatever you are saying. Don’t make any small mistakes, if you cannot prove to your investor that you are a detail oriented person, it is these little blunders adding up that makes the investors to lose faith in you.  Set up a schedule which works for both parties so updates can be conveyed. The end goal here is to establish trust.

Most founders fail because they are proud of their product and are unable to handle criticisms or feedback. They should absorb the feedback, put up questions, and, most importantly, not be a yes person to the investor. Come to a middle ground between accepting everything and denying everything.

What are the biggest challenges in acquiring and retaining customers as a startup scales?

 Building Value. What are the values of the founders? What do they stand for? If you come across something new and it’s not a brand you are familiar with, how will you adopt it? One reason you might adopt is because you may agree on some values of the ones creating the product. One has to be very clear on the value system, and in case of the SaaS entrepreneurs, they need to define the roadmap and put it in front of the people.

That roadmap should make the customer understand that they are getting regular updates, not the kind of updates you give your internal teams or investors. Customers will leave if they have no clarity on where the company is heading. This is where the challenges arise. If your customer is left in the dark, they’ll stop using the product. If they don’t use it once a week, they may leave. If they don’t use it even once a month, they’ll definitely leave.

However, customers should know what is happening with this company. Customers will leave you if they do not have clarity as to where this product will go. What will it come? Are they growing? Are they not growing? If you cannot communicate that to your customers who are with you, they will churn, they will leave you.  Secondly, it's education. If your product is good but no customer understands its usage, they will also abandon the product. Onboarding and making the user feel comfortable with your product is also a challenge. Post onboarding, you have to keep them engaged. If the startup has solutions to all these, it is ready to scale.

How do you see the startup ecosystem evolving over the next five to ten years? What trends do you believe will shape the future of startups in India?

The past two decades have been phenomenal, and it will accelerate. From not having a startup ecosystem to giving the world numerous unicorns, we have come a long way. The social fabric is changing, people are getting encouraged in their societies. With all these changes we should triple whatever we are producing now by 2030. Education and information is no longer confined to the metropolitan areas, thanks to the internet it is now democratized. The ecosystem, the social fabric and the support are all coming together to deliver exponential growth.