What are the key ingredients of a successful business?

During a recent staycation in Singapore’s Chinatown, I came across a popiah stall in one of Singapore’s ubiquitous hawker centres. Singaporeans are big foodies. We love nothing more than local unpretentious fare that’s served up in one of the numerous open-air complexes that are commonly found all over the island city-state. Hawker centres were initially set up as a more sanitary option to street food. These days, hawker centres have become a cultural institution in itself.

I gazed curiously at the long queue that had haphazardly formed behind the woman who was making the popiah. The glass panel at the stall was crowded with one too many newspaper write ups and awards. I thought back to the many startup networking sessions that I’ve attended over the years. I remembered all the discussions on ‘scale’ and how integral it is to the viability of a business. I thought of complex formulas, USPs and all those other strategies I’d studied in business school.

And yet this lone woman selling this lone popiah had a queue that stretched out halfway across the hawker centre. There are many popiah stalls out there. What made this one so special? I stood in the queue and waited my turn. There was a sign that said ‘Cash Only’ at the counter. When I gave her my $50 note, she scolded me and told me to bring smaller change next time. She gave me no choice but to accede to her request. I bought two rolls and sat down. I ate the popiah.

It is, hands down, the best popiah I’ve had in years.

Weeks later, I can still remember how delectable it was. As a startup founder, I invariably began to muse about the key ingredients of a successful business. I have a chat with Vandana Rajendran, one of my business advisors at Mith Books. Her unerring and practical no-nonsense business advice never ceases to amaze me. In this Fireside Chat, we discuss the popiah stall and the startup scene.

Dipa: What would you say is the difference between the popiah shop and a vast majority of the businesses on the startup scene?

Vandana: The popiah shop operates in only one marketplace – the market for customers. Because of that all their actions are focused on one unifying purpose – to serve the customer in the best way possible and to get as many customers as possible.

A conventional ‘start-up’ (ha ha pardon the pun) is operating in four marketplaces at the same time. The market for customers, the market for good vendors, the market for talent and… if they want cash – the market for investors. Because of this, there are many things that they need to juggle – making sure that they look attractive enough for good talent and potential investors, while trying to secure a steady sales cycle and developing the right vendors or partners to work with. 

Some of these goals might at times run in conflict with each other. If the company needs higher sales, obviously, somebody has to work hard for that to happen. But longer working hours is not something that an employee is comfortable with. 

So how does this seem to an outsider? I think those on the outside invariably see that difference in how purposeful each business seems. The goals of the popiah shop are transparent to everyone. Every action is in congruence with that goal. But in a startup, the ‘vision’ that the founder first started up with, can get lost easily.

The tussle between the investor and founder is often on how “patient” the capital must be. This will be the foundation of many decisions between long-term investments and short-term investments for the company. Also, the risk appetite of the founder is typically higher than that of the investor.

A major conflict is usually between the employees and the founding team or management team. Most of the employees in a start-up are not there to stay in the long term. They usually have a career path in mind and are working towards it, looking to enhance their skills and market value. In a start-up, they might end up doing projects that are not necessarily in-line with their career path and this creates discomfort . They will tend to gravitate towards doing what they want to do, eventually.

This is why most businesses–including established corporations–have a vision statement. A start-up founder needs to communicate this vision often to every stakeholder. Practically speaking, the founder cannot force everyone to work towards the vision. It is important to work out ways in which both parties reach their respective goals in mutually beneficial ways.

It is important for the founder to be the driving force for the start-up for at least a few years. Otherwise, things fall apart.

I’d like to think of businesses in metaphors related to vehicles, for some strange reason. I see a popiah shop as a car driving through a busy town to reach its destination. Typically there is one driver and if necessary, a navigator. When you drive through a town, everything is happening fast. Traffic comes at you all the time, you need to switch lanes and speeds, and directions. That’s how the sales cycle of a popiah shop is. You face customers everyday, and your suppliers everyday. You have a very close ‘ear-to-the-ground’ on the market and the economy and the changing tastes of people, which is why the focus is so sharp.

I see conventional corporations–both start-ups and large established businesses–as ships sailing on the sea. The larger the ship is, the more are the people working on it. You may sail for days together on perfectly calm seas and everybody is doing their part. You usually need a specialist to keep an eye out for the weather, another to sail, a third to navigate, people to keep the engines running and someone to make food for everyone.

Each specialist brings in his piece of information and the captain (or business head) needs to make his decision based on all that. Invariably, every specialist believes that his piece of information is the most critical. You need a communication system to tell everyone on the ship that you are taking a U-turn or trying to avoid that ice-berg. Hopefully, no one has taken a coffee break at that precise moment! The larger the ship is, the longer it takes to make course corrections.

Dipa: I’ve heard people in the startup scene say that if you work in your own business, you’ve replaced your ‘job’ with yet another ‘job’. What is your view on this perspective?

Vandana: I think it depends on why you started up that business in the first place. If you did it to showcase a special skill that you have, which, maybe, wasn’t recognized enough elsewhere, then yes, you are bound to feel the same whether you work for yourself or for someone else.

But if you’ve started up with the intent of providing a unique value to your chosen set of clients and other stakeholders, then it is nothing like another job. Fundamentally, I think you need to enjoy and relish the process of business-building, if you want to keep going in the start-up.

Dipa: Scaling a business or starting a popiah franchise might even take away from the specialness or uniqueness of a business. Is it necessary for businesses to have scale in mind when they start?

Vandana: When a business starts up, I think they need to be clear on what they want to do with their customers. Do they want to serve as many as possible, or do they want to serve them at their best? The answer to dilemma of scaling lies in this.

Of course, it also depends on so many factors – is the product or service suited for scaling? Do the customers benefit from your scale? For instance, the customers of a car manufacturer would certainly be much happier with a large network of repair and servicing centres. But I might not be so happy to share my favourite tailor or dressmaker with too many other people.

Scaling, like every other element of business strategy, is context-dependent. By context, I mean the specifics of the environment the business – the industry, the nation’s economic status, the competition, the suppliers, the customers, the product and a host of other factors.

Without context, strategy is irrelevant. 

Dipa: Over the past few decades, small businesses all over the world vanished as corporate conglomerates came to the fore. Disillusionment with life in a large corporation has led many to return to their homes and start small online businesses. What trends do you foresee in the future?

Vandana: Actually, I see this as part of a natural cycle of the economic world. From both the perspective of someone who is working for, and someone who is buying from a large corporation, they eventually fail to fulfil the needs of their employees or customers. I believe this is fundamentally due to the ever-changing nature of needs of … all humans. A large company cannot adapt quickly to this, and hence disillusionment will set in for both the employee and the customer. This disillusionment creates a new need and that’s how new businesses are born.

The start-up begins by serving a niche market and when that niche reaches a mainstream volume, the start-up might choose to grow to serve the mainstream market. Competitors appear, and the small bay opens out into the sea. The yacht must become a ship to navigate these waters and eventually the start-up of today becomes a large corporation of the future. We reach another point in the cycle. 

I think this growing and then fragmenting nature of groups is seen everywhere – in the making and breaking of kingdoms and nations, in animal packs in the wild and even in social groups.

The only thing that has changed over the ages is the social acceptance, and easy availability of information. These factors might change the length and timing of these cycles, but I doubt if this would change the cycle in itself. Like a good garden, the world needs a variety of businesses to be balanced.

About the Author

Dipa Sanatani is the Publisher at Mith Books and the author of The Little Light and The Merchant of Stories. In The Merchant of Stories, Dipa takes the reader on a personal journey–narrated through a series of candid journal entries–on what it takes for entrepreneurs and creatives to start their very first venture.