If the unit economics of your business are so that you’re making money from every sale, then you are likely to be able to increase your profits and grow: Nilekani
If you’re dependent always on external capital You are exposed to the fluctuations of the marketplace and fundraising Nandan Nilekani
Companies which do an excellent job of engaging, motivating, and keeping people will do better than those that do not in the long term: Infosys cofounder
Infosys co-founder Nandan Nilekani in a press conference on Wednesday (August 10) said that startups should concentrate on growing and profitability at the same time.
“I believe the issue of profitability or growth comes only when the unit economics do not match up. If your unit economics show that you’re making profit on each sale, you will be able to increase your profits and grow. If you can do that then the rest will follow,” Nilekani said.
He made his remarks in a panel discussion hosted by the growth-stage startup-focused scaling platform the xto10x platform in Bengaluru. The panel discussion was attended by famous names like Marico chairman Harsh Mariwala, Swiggy’s co-founder Sriharsha Majety, and Flipkart Co-founder Binny Bansal.
“The current economic climate shows that you ultimately have the power to decide your destiny. You need to make cash to fund your future. If you’re dependent constantly on external capital sources You are exposed to the fluctuations that come with the markets and the fundraising process,” Nilekani said.
The Infosys co-founder also advised companies to invest in people and hire wisely’, insisting that they must be focused on reducing costs for acquiring customers.
“Those firms which do a fantastic job of engaging, motivating, and keeping people in the long run they will succeed more than those that do not. In addition I am a firm belief that you shouldn’t spend a lot of money on customer acquisition since the best customer acquisition comes at low cost and there are a myriad of ways to get this goal,” noted Nilekani.
Speaking about his experiences, Nilekani said that while developing Infosys as a company, he and co-founders were focused on growing and not raising capital particularly in the days when funding as a concept didn’t exist.
“We founded Infosys completely bootstrapped during the 1980s. With no internet it was necessary to create the company and its network by hand. However, we always went forward with a plan in mind of how we could grow our business from 5x, 10x, and even more,” said Nilekani.
Bansal who is the co-founder of xto10x. talked about his experiences in scaling Indian E-commerce giant Flipkart.
“The initial 4-5 year of Flipkart journey were determined to move forward. The company was at 1X, and was looking to increase this number to 2X-3X in this year. As we grow our business, we realize that we’ll have to establish forward-looking goals and then move backwards in creating plans to achieve the targets,” said Bansal.
Nilekani’s announcement is coming at a time that the nation’s startups are reeling in the aftermath of the alleged winter of funding. In the midst of a slowdown in funding and the rise in interest rates, a lot of startups have taken to mass reductions in staff and other cost-saving measures.
A number of listed startups, including Zomato and Paytm were also criticised for their failure to earn profits in recent times. However, in certain instances certain startups claim to have mapped out a route to profit and breakeven.
According to Economic Pitch information, Indian startups raised $19.7 Billion in funding over the past seven months. In addition, India is also home to more than 105 unicorns including blockchain-based startup 5ire becoming the latest addition to the elite club this month.