Lessons from an entrepreneur – Yamu

Starting your own business is like being a celebrity – everything looks beautiful and glamorous on the outside, but in reality, it’s messy and hugely stressful, and not everyone succeeds. But the success of a few encourage those entering the fray

It’s common knowledge that being successful in business calls for perseverance, hard work and being nimble, mainly on the part of the founder. But there is no set formula to achieve success, as no two startups will ever be the same. Echelon spoke to three entrepreneurs whose brands have achieved market leader positions on what it takes to win at the startup game and their tips for budding founders. Also featured is a business leader that made a daring decision to leave the comforts of corporate life to realize a greater vision.

 

LEARN FROM YOUR MISTAKES, KEEP GROWING

A business sees a need in the market and provides a solution, while a startup foresees a need and creates a solution people didn’t even realize they needed. By this definition alone, Yamu is a startup

Yamu – a digital food and lifestyle review company – was launched at a point when global startup culture promoted building first and monetizing later. So, they followed suit. The result was a tough couple of years where money was scarce, but Yamu emerged on top, bruised but with a story to tell and tips for budding entrepreneurs.

Creating value vs. capturing value
● “Yamu has created value. If Yamu disappeared, people would miss it. But we haven’t captured that value monetarily,” Yamu Founder Indi Samarajiwa says.

Five years ago, starting a venture was the ‘fun thing to do’, he says, as there was enough money floating around, and excitement and hype about startups. Today, it’s become more important to capture monetary value.

“The value you capture may not even be where you think it is,” he says of Yamu’s latest venture, video advertising, which now rakes in 70% of the company’s revenue. He also cites Amazon as an example, which started selling books and goods but created value through its technology and web services.

It’s important to understand your business and look beyond Sri Lanka to grow globally, he adds.

Business education is more important than you think
● “When I started, I made two assumptions: that I was smart enough and that I can manage people well. Both were incorrect,” he laughs. Running a company of 3-4 people on Rs200,000 a month is very different to managing 25 people on Rs2 million a month. A main problem, Samarajiwa found out, was his lack of basic economic and accounting knowledge.

Sri Lanka’s definition of a startup is based on a few extraordinary examples like Facebook and Amazon, although a majority is not at this level of expertise. Contrary to the saying that you’ll never use math in daily life, he wishes he had studied economics and accounting beforehand to be able to read the vital signs of his business.

“If I was advising someone starting out, I would say, whether you are aware of it or not, economics and accounting will affect you. So a basic business education is advantageous.”

Investment without strategy is bad for business
● Funding is like oxygen to startups, but knowing what to do with it is more vital. Startups in Sri Lanka are enthralled by the money available to them and end up investing in non-strategic areas, which does not bode well for the company.

“Right now, this month, we are profitable. That’s due to a lot of hard work, stress and pain. It was a lot more fun when we didn’t have to worry about that.”

Samarajiwa admits Yamu didn’t have a clear investment strategy in the early years, but now bases its key decisions on market research and measurement. “Right now, this month, we are profitable. That’s due to a lot of hard work, stress and pain. It was a lot more fun when we didn’t have to worry about that,” he quips.

A diverse board means more opportunities
● “Yamu is at an inflection point. We have a legal board, but not a board of advisors,” Samarajiwa says. With big plans in the pipeline in the areas of tourism, services and delivery, he feels an advisory board would have been helpful in the decision making process. He says the popular notion that a startup succeeds because its founder had a great idea they followed through is overrated. Rather, Yamu was built on ideas contributed by many people.

In the same way, he feels a diversified board of directors, including women and people who don’t agree with him, can offer a different perspective on the company’s existing and future ventures.

Timing is everything!
● Timing is a critical determinant of success. Launching too early or too late can make or break a business, but there is never any way of being absolutely sure.

“We started our delivery business too early, when there were no mature players to partner with, and we had only one customer,” he explains. Since then, Yamu has partnered with Foodie and Quickee to provide delivery services.

At the other end, “we made the right decision with video”, he says, which started making money from day one. He also advises against starting multiple ventures simultaneously unless you are an experienced entrepreneur.

Management is all about motivating people
● Managing a startup also means managing people. Samarajiwa admits that being your own boss is not as fun as it sounds, as you have to answer to all your stakeholders versus just one boss. He also advises that the ability to work with other people at a bigger organization will play a crucial role when you start your own business.

The part he dislikes most about being a boss is hiring and firing. “Everyone looks the same at work, but have very different circumstances. You have to take this very seriously,” he says. Communication is vital, as it can mean the difference between resolving a problem or someone moving out.

“You may be the nicest person, but even managers can make mistakes out of ignorance,” he cautions.