Entrepreneurship

Top Five Reason’s Pakistani Ventures Fail to Take Off

Autopsy.io is a site that keeps track of failed startups and why they flopped. The site lists the name of the start-up, a crux of the idea and the reason for the start-ups demise. Given the growth of start-up supporting incubators in Pakistan over the last 2 years, fueled by the proof of concepts created by Rocket Internet, the local start-up scene has been the center of a warm media glow.

I reached out to local start-up founders to learn about their failed companies or projects and summed up the lessons to:

Neglecting the Customer Journey
Inspired by Quora and the private Facebook group “Pakistan Start-ups”, Kamil Rextin created a an online community called Poocho.co. It was meant to be an alternative, more structured and open platform to share ideas and ask questions about startups
in Pakistan.

So what went wrong?

According to Kamil: “Facebook plays nicely into one’s daily routine and no one wants to go to another place to login and do the stuff they could on a Facebook group. Also, we could not get some folks who would have brought in a lot of other people interested or invested enough to ask or answer questions.”

Non-Existent Brand Strategy
While not technically failures, the CEO’s of Bag A Bagel and Delivery ChaCha have attributed “weak brand awareness” as the primary reason for their slow growth. This has more to do with their unique product itself, rather that the brand image. Bag A Bagels founders faced issues creating a product that was both healthy, absent of preservatives and could have a long shelf life.

At the moment, their product lasts 3 days, is healthy and is reasonably priced. And yet sales volumes aren’t where they should be. Delivery ChaCha struggled to communicate the exact nature of its value proposition that is “instant delivery”. But as time went by, customers and reviewers on groups such as KFD transformed the brand to being that of a food delivery service.

And while Faizan Laghari’s Forrun.co venture capitalized on this and locked food businesses like Foodpanda as a delivery back-bone infrastructure service, Delivery ChaCha has since struggled to scale.

Excessive Networking
In May 2015, WomenX organized an event called “Riding the E Commerce Wave in Pakistan” and invited me to moderate a panel discussion with a line-up from Daraz, The Brand Crew and renowned fashion CMO’s. Among the packed female entrepreneur audience, the CEO of MWM Studioz – Danish Ayub – was present, with his core team in tow. The point of attending the session was to learn what eCommerce titan’s thought about their practice and to engage with audience members thereafter. And yet, within an hour of the event, the whole team left.

Why?

They had just received an email confirmation on having closed a deal with a brand, known for being the world’s largest suppliers of athletic shoes and apparel. The customer mattered more than the networking.

Speaking from his own experience in the energy and technology industry, Danish advises start-up CEO’s to “only go to events packed with potential customers from your industry. Or spend your time in business development. Standing for pictures with other start-up CEO’s and getting your face in tech magazines only propagates a bubble and does little for your bottom line.”

Poor Positioning
If you want your prospects to enter what is known as “clients from hell” mode, tell them you’re a start-up. That’s a response we got from numerous seasoned entrepreneurs, including Samir Saleem, the former CEO of HybridSignals. His experience, and others like him, reveals that companies need an excuse to take you less seriously and enter ” towards start-ups.

As a result, companies like his were invited to be part of the warm media glow directed at start-ups that time if nothing else. It’s also an avenue for companies to position themselves as pro-start up as part of their CSR funnel.

ZONG launched a partners campaign that promised to support start-ups and entrepreneurship. Joining an initiative by billion dollar ventures looks good but eats up a lot of time. The initiative led to no impact in the start-up community.

According to Samir, the giants won’t help small players create competitive products.

He went to the initial launch of Telenor’s Apportunity and but notice that “they were only interested in promoting their own apps. Why can’t the developer get his own funding? Making an app and putting it on the app store is not hard. Why aren’t they following up on it by promoting the developers?”

Weak Strategic Planning
Last year, Usman Ashfaq and two of his friends came together to launch a HOMEXPRESS replica venture called Spotlight. While initial customer acquisition and communication the value proposition went well, the trio failed to follow up and regain repeat business from the customers.

This was coupled by the fact that within a few months of the business formation, one of the partners got married (and that was that) and the another partner got into his dream MBA school. Without a dedicated team for acquisition and retention, the business had to close within 6 months of formation.

To Conclude
In my experience interviewing tech and non tech business founders, it stands to reason that the #1 reason internet start-ups fail is the inability to acquire and retain customers, at a continuous growth cycle. According to research from MWM Studioz, the average internet user regularly engages with only seven sites everyday without question. The goal of an internet business founder should be to build something that becomes one of seven sites that a large swath of users will regularly use.

Last week, I spoke with Mehmet Celel, the CEO of SOLEN Istanbul, a man who chose to bring his family business into Pakistan and share the Turkish cuisine. Without having prior experience (commercially) dealing with Pakistani’s, he succeeded. When asked how he did so, he says that confidence in oneself is key and that one should create a strategy and execute on that strategy.  He does not believe in the idea that an entrepreneur should A/B test a strategy. He says “Don’t leave yourself vulnerable to the focused entrepreneur, so follow a deterministic path.”

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  1. Pingback: 5 Reasons why Pakistani ventures fails to succeed | i entrepreneur

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