Dear Startup Ecosystem, let’s have a heart to heart

By Zahid H Lilani on
January 5, 2016
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Within the startup ecosystem in Pakistan, there’s a lot of focus on trivial outcomes (awards, photo-ops).

Sometimes I wonder why, other times I binge on Netflix.

Then one day, I have a light bulb moment.

People sometimes don’t see the obvious that is right in front of them.

Netflix can wait, it’s time for a heart to heart…

Dear Incubators

Startups have 90% failure rate. The main purpose of your existence is to minimize this risk, everything else is secondary. To that effect, you are failing startups because of broken structure and lax adoption of best practices.

Entrepreneurs I have spoken to, describe the scene as chaotic and free for all. Pakistan might be the only place in the world where startups “incubator hop” in the hopes of free office space.

Without structure, an incubator is nothing but a glorified internet cafe. A place where people come to “hang” all the time and no real work gets done. It’s time to have a set of rules that don’t bend, a clear value proposition that is mutually agreed upon and a commitment to a higher standard. Let’s pave the way to success, without the need to “incubator hop.”

Besides that, consider implementing the following best practices:

  • Application deadlines.
    Every time a deadline is pushed, you are insulting serious entrepreneurs that submit applications on time.
  • Quality over quantity.
    It’s better to have 5 good startups than to have 12 mediocre ones.
  • Skin in the game.
    Provide upfront funding to startup so doesn’t hire an “intern” to work on its MVP.
  • Fix your websites.
    Make all facts accessible and avoid puffed statistics – it’s 2016.

Don’t get me wrong, you are doing great work. It wasn’t even possible to imagine that startup incubators would exist in Pakistan 4 years ago, but here you are. I just see some visible cracks and the good news is, it’s not too late – let’s get the basics right.

Dear Mentors

You are awesome. You are someone in between a critic and a cheerleader. You can proudly say “been there, done that.” You can change the downward trajectory of a startup with your advice. You have this great opportunity to leave a long lasting legacy. Then why is it that lately you are asking for an equity stake or payment for time spent advising? Or worse, to make introductions?

Predatory advising is the last thing this ecosystem needs. At the very least, the hope is, that you:

  • Have a firm belief in the entrepreneur, not the idea.
  • Ask questions, without judging.
  • Share wisdom, not spray information.

If you call yourself a mentor and can’t relate to anything above, it’s time to call it quits – no hard feelings.

Dear Angel Investors

You are by definition risk-averse; will settle for less return for a much lower risk. However, startups are high risk, high return. You understand this to some extent, but the Lavaria Town plot is tempting and can yield a better return. If that’s your calling, then by all means, go for it.

If you still decide to invest in a startup because you can see the bigger picture, please keep in mind the following:

  • You will not get majority or half of the equity in the startup; you are not a partner.
  • You will get a board seat if the founding team agrees that you can add considerable value.
  • You will not act as the CEO; that position is already taken.
  • You will not disguise your investment as a loan.

This might seem unfair and investor unfriendly, but it is the required first step in developing the culture – think outside the plot.

Dear Entrepreneurs

Thank you for doing what you do. History will look back at you with fond appreciation. But here’s the thing, shit will get worse before it gets better. This is a long con, not for the faint hearted and certainly not for a “wannabe.”

You should eat, breathe, and sleep your product. This is not something you do on the side while making $5 logos on Fiverr. This is something you do after you have made enough $5 logos and can survive in the startup trench.

Focus is the key. It’s the key to developing an unfair advantage. In order to develop an unfair advantage, ask yourself the following:

If you are competing:

  • Is my product 10 times better than anything else on the market?
  • Is my story 5 times better than my product?

If you are monopolizing:

  • If I had 24 hours to live, would I be doing this?
  • Do I have the smartest team possible?

Having a solid unfair advantage will set you apart from the herd – you have one job.

Startup ecosystems are not built overnight, I understand that. It takes years, sometimes decades. The way things are, it will surely take decades. But, it doesn’t have to be like that.

Back to Netflix.

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