Malavika Velayanikal interviewed me for SaaSBOOMi.
“Once you start burning cash, it’s very painful to roll it back. You tend to become inward-focused because you have to think about which team has to be shrunk, and that has its own impact on morale. So in tough times, which we’re going to see in the next 12 months, the biggest challenge is that the entrepreneur’s time gets spent on cutting costs or raising capital. Whereas, for a growing company, time has to be spent with customers, product, and engineering,” says Jain.
What then is the path forward for founders who slipped into high cash burn last year and are now trying to ride out a crunch?
“Two things are important in this situation,” says Jain. “Founders should have more capital than they think they will use because buyers are going to take longer to make decisions. So you need the extra runway for early-stage companies. You have to assume sales will take 50-100 percent more time.”
“Secondly, you need to be cautious on the cost side and find a faster path to profitability.”
…Rajesh Jain’s own philosophy as an entrepreneur from the very outset has been: “The best growth capital is your own profit because you don’t depend on anybody else.”
The three key lessons for Rajesh Jain from his forays into foreign markets are:
- Top leaders of the company have to relocate and be hands-on with understanding customers, identifying verticals, finding product-market fit, and building a team in the new market.
- Sufficient capital for hiring the right people, fine-tuning the GTM strategy, and allowing for downturn effects and iterations.
- Deep product innovation for developed markets like the US, where competitors abound in every vertical, and not just pricing innovation.
…Perhaps the biggest takeaway from Rajesh Jain is to never go up. The move to the US was delayed and then disrupted by the pandemic. But, thanks to the cash reserves it built up by always keeping an eye on profitability and sustainability, Netcore could now fast-track the GTM with acquisitions.