PM Guest Article

On Traditional Strategies in Startups for Success Management

Belwadi Ramesh

Belwadi Ramesh has done B. E in Electrical Engineering from M.S.R.I. T and did MTech from IIT Kharagpur in Electrical Engineering. He has worked as a Software engineer in Singapore, USA, India in various companies like Informix, Oracle, IBM etc. for 25 years. His interest has been to understand how economies become rich. This has helped him understand various financial instruments in the USA, India, China etc.

Startups are enterprising people taking risks to try new things to do something useful for society. Startups function against enormous odds, facing challenges from all directions.

A startup faces challenges from

  • existing players
  • non availability of funds
  • non acceptance in market

As you can see, such challenges are related to the system of economy and are difficult to comprehend.

Having a clear vision on how economy functions can increase confidence and helps pick the right strategy for startups.

In this article let’s look at how banks function and how wealth is created using simple examples. This helps startups focus on prime targets without getting deviated in the noise of economics. Let’s understand how to create and pick from a wider list of options for effective contribution to company, self, and country.

What are markets?

Market are places of interaction between producers and consumers. The goods and services are created by producers. The consumers are people in the society. The game of market is dictated by supply/demand, monetization, capitalization, and the flow of funds.

How wealth is created in economy

Wealth is created when useful goods and service are created for society. The transaction resulting in wealth is confirmed when sale is done for an amount mutually negotiated.

We all know that America is a superpower as it produces a lot of goods and services. India is still not a superpower in spite of having a large educated population.

How super power is built

An example of 5 people working is shown, where each person spends Rs. 1 Lacs and creates goods/service for another person. In this example value of transaction is fixed as “Rs. 1 Lacs” for ease of understanding.

Refer Figure and observe the activities

  • A does work for B (builds a small house for 1 Lac)
  • B does work for C (builds a small shop for 1 Lac)
  • C does work for D (builds a car for 1 Lac)
  • D does work for E (builds an auto for 1 Lac)
  • E does work for A (builds a small mall for 1 Lac)

Observe what happens in 5 iterations. Now imagine what happens in 100 such transactions.

Consider two situations

  • When quality work is done
  • When bad quality work is done

It can be seen if quality work is done, in each iteration new product is created by adding value to the individual. So value with each person accumulates resulting in building wealth 100 times.

If bad quality work is done, after each iteration is over, the product created in earlier iteration is not working. So none of them have wealth after 100 iterations.

Money circulation is same in “quality work scenario” and “bad quality work scenario”. But in “quality work scenario” wealth is built. In “bad quality work scenario” wealth was not built.

This shows the difference why America has become super power and India has not become a superpower.

The secret of building a superpower is to do quality work for every money transaction.

Acceleration of wealth building

The wealth built by quality work of 5 people method described above can be accelerated by Banking fund and Investor funds. This creates exponential wealth in the economy.

How banks work

Banks work similar to Virtual memory manager(VMM) in computer. The amount of money in economy is rotated by Banks just like how VMM rotates physical memory among processes in computer.

Assume a computer has 4GB real ram. Using VMM it gets used among 50-100 processes. Each process will take address space of 2**32. (i.e.) 4GB. Now the Virtual memory manager is creating virtualization as if every process is using 4GB.

Note:- The population in India is 140 crore. This amounts to 10k Rs/person. Similar to how computer rotates 4GB ram among 50-100 processes, the Banks rotate 10k/person among 50-100 persons. Thus 10k/person is used 50-100 times.

Spiritual economy and Transactional economy

The economy can be dictated by spiritual mindset or transactional mindset. With a spiritual mindset the goal is to consume less resources optimally. This is ensured by regulating desires. If the economy is dictated by a transactional mindset, the goal is to earn more wealth, create more wealth. Mind is left free to enjoy maximum.

Typically, in a spirituality-based economy, economic growth is very low and linear. In transaction-based economy the economic growth is rapid and exponential. Due to this lot of jobs, products, goods get created in transactional economy. The impact on the surroundings by spirituality-based economy, is low as growth is stagnant and slow. However, in a transactional economy rapid growth, rapid investment, disruption keeps happening. Due to this, impact on the environment and surrounding is enormous.

Thus, the law plays an important role in ensuring desirable behavior and desirable outcomes from players in transactional economy. Startups can easily flourish in transactional economy, however in spiritual economy growth is restricted due to the  less money in circulation.

Choosing work to do

Startups have very limited time. This means they have to quickly decide on the best problem to solve.

Following traditional method gives very little options to choose due to our existing mindset.

Normally people care for 3 things – self, company and oneself.

The technique below helps you find 5 best things you can do

  • for your country
  • for your company
  • for yourself

Create a table as shown for getting “5 best things to do for your country”

In the first column, you list, how you can destroy your country.

In the second column, you list opposite of first column in positive fashion.

In the third column, shortlist work based on your capability and ability to deliver. Finally, pick the top 5 items to work on.

Follow the same process to identify the best work for your company and for yourself.

How to use Blockchain

We have a country where people are willing to work. If we provide a mechanism using Blockchain such that incentive is given for quality work over the lifetime of products and services, automatically quality work happens in the country. This ensures wealth creation in nation. Thus increasing jobs, monetization and capitalization.

Understand limitation

Using spiritual method economic growth is low. The damage an individual or a company can cause is also limited. Importance of law is low in spirituality based economic conditions.

In transactional economies, economic growth is rapid. The growth may cause disruptions, confusion, destruction. Because of rapid changes in the surroundings the society may not be ready to absorb the impact of rapid changes. So law provides guidelines for participants in economic growth to comply.

Ability to create laws and their implementation become very important in transactional economy to prevent harm by rapid economic growth.

Startup strategies

When startups are aware of their limitations and opportunities in various economic models, they can choose to navigate with confidence to achieve their goals.