The four-year-long battle of world war -II ended with the infamous brutal bombings at cities Hiroshima and Nagasaki by the US forces. The cities were engulfed into radiation of 1000 radon units which appeared to be fatal for the humans or any living being when exposed for 10 minutes, but interestingly the cockroaches remained alive and kicking even after being exposed to this level of radiation. Since then, the cockroaches usually looked upon as mere creatures rose to become one of a kind species that can endure any disaster.
Similarly, in the startup world, tagging any venture to be a cockroach startup is an appreciation since it means a business that is hardy, resilient, able to withstand struggles and changes in the market, and keeps moving in the forward direction just like a cockroach. Its speed of growth if we compare it with unicorn startups will appear to be slow.
The race to become a unicorn startup
It’s the beginning of 2022 where already 10 Indian startups have boarded the unicorn bandwagon. India’s obsession with becoming or building a unicorn startup brand became quite evident from the reality show Shark Tank India where a majority of founders expressed their interest to straightway become a unicorn. To which Boat’s co-founder and CEO Aman Gupta corrected the contestant’s thinking saying, that one needs to pick up an unaddressed problem, solve it, build a market and a large customer base and then think about reaching the unicorn status. Of late many established startups such as Flipkart and Snapdeal after reaching the unicorn status had difficulty in raising funds from investors at a higher valuation since their revenues were not matching up to their expected valuation.
Investors are not shying away to fund the cockroaches since these startups are imbibed with the old school principle going ‘ slow and steady’ that have robust business models to scale slowly and can stand the test of time. For investors, investment cockroach startups are a risky investment.
A cockroach startup is an appreciation since it means a business that is hardy, resilient, able to withstand struggles and changes in the market, and keeps moving in the forward direction just like a cockroach.
How to become a cockroach startup?
Here are ways for new entrepreneurs to become a cockroach startup :
Reduce spends on fixed assets: Building a startup requires money which one needs to avoid. For example – initially, a startup can rent a co-working space instead of owning an office and instead of purchasing laptops for each employee, they can ask employees to bring their laptop to the office.
Understanding business economics: Most startups that begin well tend to fail at the cost of launching and manufacturing a product, customer acquisition costs, delivery costs, etc. The business needs to get its unit economics right since there is no point in starting a venture without knowing the novelty of the service, product, or availability of funds. Well-funded grocery delivery startup PepperTap operated on a negative margin per delivery, where the profits looked dismal.
Focus on profits: A cockroach startup does not hurry to become popular in the market by spending money but focuses on increasing revenues and profits.
Better products will help to survive: Cockroach startups are adaptive as they can survive in tough conditions by having a real product or service. Usually, when a business starts picking up the right direction, founders forget about the product or service and start focusing on getting funding. Whereas in a cockroach startup, the energies and money are always spent on improving the product or service.
Lastly, if you have adequate money, backed by big funds, one can afford a high burn rate and still survive. But if one has no or little money in the pocket but a sound value proposition is all that you need to survive. Initially, the start-ups in the initial days should focus first on surviving, next on profit, and only after both are achieved reasonably should go for growth.