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Why getting the basics right is absolutely essential for fintech startups?

Anyone wise and who wished me well always said “Get the Basics Right”.... Looking back, no one really ever told me why? I mostly figured this out on my own - and many times the hard way.

So why are the basics so important? 
Because the basics never change – Whether it is the basics of math (arithmetic, algebra, geometry, trigonometry, calculus, integration), basics of science (physics, chemistry, biology), basics of history, basics of geography, basics of economics (microeconomics, macroeconomics), basics of personal finance, basics of wealth creation, basics of human emotions, basics of investing, basics of architecture, basics of management, basics of leadership, basics of relationships, basics of cooking, basics of medicine, basics of mechanics, basics of genetics, basics of marketing, basics of learning, basics of communication, basics of design, basics of health, basics of weight loss, basics of service management, basics of process management, basics of time management, basics of politics, basics of....just about anything. You can undergo several transformations in your lifetime, but if your basics are well founded and grounded, then you are insured for life.

Because the complexities are built on the basics – If you truly understand the basics, you can build and appreciate the complexities around you. And if you don't have your basics right, you will never really be able to appreciate the complexity if anything around you. And this is true for any topic under the sun – from complex mathematical algorithms to complicated macroeconomic principles to the laws of nature to advanced medical research to complex legal issues to pricing to strategy to technology to process to people and human behavior...

Because if your basics are strong, you can face anything that life throws at you (good, bad and ugly) – If you are clear about the basics and can apply them for anything in life, then you can navigate through all that comes your way and feel equipped to handle any circumstance. That’s really important for anyone as we sail through life as you never know what life unfolds in front of you....

So what are the basics which all fintech startups should absolutely get right if they are to have a fair chance at survival / success?

1) Know who exactly your target "customer" is 

2) Know exactly what problem you are trying to solve / what need you are trying to satisfy for your target customer

3) Know exactly how you will acquire / on-board a customer to use your solution

4) Know exactly how you will make money - 1 year, 3 year, 5 years, 10 year from now

5) Know exactly where you will draw the boundaries and say NO - to people, process, policy, procedure, etc.

6) Know exactly when you will say "enough is enough", write-off your losses and exit

7) Know exactly the law, rules, regulations for the business / model / geography you are operating in

8) Know exactly who your competition is

9) Know exactly what your final goal / destination is, and how to get there

Simply because if these basics are intact.. even when the going is tough.. you'll be able to keep going

What basics do you think all fintech startups should invest in? Leave a comment to let me know

A version of this post appeared here

 

 

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Comments: (11)

A Finextra member
A Finextra member 15 September, 2015, 10:18Be the first to give this comment the thumbs up 0 likes

"Get your basics right", yes it is well said. And it may be highly relevant for math, science, economics etc the entire list that you have mentioned above. But is it still applicable for the new Fintech and (startup) compaines? How the astronomical valuations are justified? are they follow any basic business economics? how the revenue streams are valued? How we can follow the "basics right" paradigm when the valuations are made during funding round? and not by market.  

Nischala Murthy Kaushik
Nischala Murthy Kaushik - Wipro Ltd. - Noida 15 September, 2015, 11:50Be the first to give this comment the thumbs up 0 likes

Hi Aparty - Thanks for reading. what I mean is the "business fundamentals" within the startup.. Not the valuations game or external perceptions. In my view, you will survive based on what you know, and they don't know! 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 15 September, 2015, 12:29Be the first to give this comment the thumbs up 0 likes

I recently read an article about young tycoons of India. The first thing that struck me at the time was how some people have made it to this list, with their wealth and stature compared with that of traditional billionaires, by building businesses that make virtually zero revenues, suffer huge losses and operate on the fringes of the law. Some of these startups have also been named as leading startups of the year in a leading startup contest earlier. Not sure what you call "business fundamentals" but I was always told that making revenues and profits in a legal manner was the most important business fundamental of them all. Maybe it's only me. 

On another note, there's this story about Albert Einstein that busted the myth of immutability of what constitutes basic even in hard sciences: When he was a professor at a Berlin college, Prof. Einstein distributed question papers for an exam. After noticing that virtually all questions were repeated from the previous year, many students asked if the absent-minded professor had distributed the previous year's question paper by mistake. Assuring them that he had not, Einstein quipped, "the questions are the same, but the answers are different this year".

A Finextra member
A Finextra member 15 September, 2015, 12:47Be the first to give this comment the thumbs up 0 likes

Thanks Nischala for your reply, By thumb rule business fundamentals always validated by the test of time and I believe banking or even investment principles always abides by it and any deviation or short-cut brings catastrophe which were seen in recent past. But how you evaluate disruption by using basic principles? conceptually they are self-annihilating by nature. I think they are only driven by perception and no one would like to mis the bus. The way we experience a bull/bear run in the market. But any way this is the reality now.

Hitesh Thakkar
Hitesh Thakkar - FIS Payments Software and Services India - India 16 September, 2015, 09:59Be the first to give this comment the thumbs up 0 likes

Blog remindes me of 'Stay Hungary Stay Foolish' by Rashmi Bansal. Startups in Fintech need to take out of lot of learning pages from it.

Nischala Murthy Kaushik
Nischala Murthy Kaushik - Wipro Ltd. - Noida 17 September, 2015, 08:57Be the first to give this comment the thumbs up 0 likes

Ketharam - Thanks for reading.. The point I am driving is that it is key to think through these questions sooner than later, Answers may evolve.

 

Nischala Murthy Kaushik
Nischala Murthy Kaushik - Wipro Ltd. - Noida 17 September, 2015, 08:57Be the first to give this comment the thumbs up 0 likes

Thanks Hitesh for stopping by.. I hope we move from foolish to wise soon :)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 17 September, 2015, 09:17Be the first to give this comment the thumbs up 0 likes

@NischalaMurthyKaushik: Sorry but I think the key is to IGNORE these questions, at least in the short / medium term. Had the founders of some of these startups bothered to think through questions of revenue, profit, legal soundness and other business fundamentals, their companies wouldn't be around today, let alone win awards and confer the honor of their founders' wealth being ranked alongside traditional billionaires. Times have changed. New ways have emerged. While they may fly in the face of conventional business fundamentals, they've succeeded in building companies and wealth. Not all these ways might be sustainable for very long. But, as John Maynard Keynes once said, in the long term we're all dead anyway. PS: BTW, it's "Ketharaman"!

Nischala Murthy Kaushik
Nischala Murthy Kaushik - Wipro Ltd. - Noida 17 September, 2015, 09:561 like 1 like

Ketharaman - Apologies for the typo in name... Yes, to each his own.. Depends on the stakes and the risk appetite and scale of disruption / innovation... Agreed that sometimes "doing it fast" is more important than "analysis paralysis / impaired decision making" - But for every successful startup which takes the podium there are a hundred who never see the light of the day because they didn't have these answers / thinking.. I find the startup ecosystem similar to the movie business - No guarantees despites the best starcast, And there is no winning formula to win the Oscars / Bollywood awards.. 

Thanks again for this engaging conversation. Lots of food for thought

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 17 September, 2015, 10:10Be the first to give this comment the thumbs up 0 likes

@NischalaMurthyKaushik: Despite all the books written on the subject, to some extent, there's no guaranteed recipe for success for any type of business, let alone one that's patterned after the startup ecosystem. I totally agree that "for every successful startup which takes the podium there are a hundred who never see the light of the day".

A Finextra member
A Finextra member 21 September, 2015, 10:30Be the first to give this comment the thumbs up 0 likes

An interesting article from Vinod Khosla:

_http://economictimes.indiatimes.com/small-biz/startups/bad-ideas-copycats-chasing-money-making-opportunities-is-creating-startup-valuation-bubble-vinod-khosla/articleshow/49038017.cms