The Earnicorns highlights profitable startups in a unicorn-dominated world

Startups, unicorns included, have been about adventure (misadventure too), independence (at least from the outside), pitches (and rounds of fund-raising in dollars

The Earnicorns: Stories of rare profitable unicorns

Author: Dhruv Nath

Publisher: Penguin Business

Pages: 303

Price: Rs 499 

As 2024 draws to a close, with the number of newly minted unicorns (startups valued at $1 billion or above) in the year at only four till now, here’s a book on earnicorns. Well, if unicorns are getting rare, earnicorns are even more so. The term refers to profitable unicorns — almost an oxymoron. In the world of startups, that mostly pride themselves for fund-raising from marquee global investors at dizzying valuations irrespective of their own bottom line, profitability is almost a bad word.

 

Startups, unicorns included, have been about adventure (misadventure too), independence (at least from the outside), pitches (that may or may not make the cut with investors) and rounds of fund-raising in dollars. The Earnicorns by Dhruv Nath takes the reader through all these steps and more to narrate the journey of four companies — Naukri.com, Zerodha, Dream11 and Zoho. Weaving the stories together is their ability to make profit in a universe that has for years believed in a business model of piling up losses and extravagant spending. Through interactions with the protagonists, including the founders of these companies, Mr Nath, a professor, an angel investor and a mentor, has tried to bust the myth that profit and entrepreneurship contradict each other. But, the author, who has written on start-ups earlier as well and is familiar with their inner workings, has pointed out that three of the companies mentioned in the book are private limited entities and their detailed financial data is not available in the public domain. Info Edge, which owns the Naukri portal, is listed.  The reader would do well to keep that in mind while taking a plunge into the lives of some of the well-known founders through the pages of this book.

 

The Earnicorns, through a complimentary and admiring narrative, promises to be a template for the future generation of startups. Some critical analysis may have added another dimension to the book. In his introduction, Mr Nath says, “There’s something absolutely critical that I must tell you.’’ He goes on to say that none of these founders was chasing valuations. Instead, they were chasing their businesses. “And because of this, their businesses did well and valuations went up to unicorn levels,’’ he says.

 

Good point, but the writer must appreciate that it would be tough to find a founder who would say he or she is chasing valuations rather than business. Also, it’s possible that a company may still not make profit while being fully focused on business for a variety of reasons. Take Amazon.  Founder of the e-commerce major, Jeff Bezos, is known for the much-talked-about focus on customer and trying to be the “earth’s most customer-centric company”. Yet Amazon remained unprofitable for years. “Famously unprofitable,’’ as Mr Bezos had said in a BBC interview back in 2000.

 

Mr Nath has made “persistent business’’ and “perfect attitude’’ his central points to illustrate the success of the four startups that he’s written about. Meanwhile, each letter of “persistent” and “perfect’’ denotes something. In the case of persistent, P stands for problem (solving), E for earning model, R for risks, S for size of the market and so on.  As for perfect, P stands for persevering, E for ethical, R for responsible etc etc. “I’m delighted to inform you that all businesses as well as all the founders [in this book] fit perfectly into these frameworks (of persistent and perfect).’’ The writer’s tip: To be successful, a business needs to be “persistent” and the founder needs to have the “perfect” attitude— including, of course, the traits of each letter in those two words.    

 

Such “how to do” advice through the book has been peppered with voices of the founders saying interesting things. Nithin Kamath of Zerodha talks about his decision to refuse venture capitalist money. “We took a conscious decision not to take money from VCs… once you take money from these guys, they get involved in running the business…You need to take quick decisions and run, and you can’t do that if you have to wait for someone else’s approval every time.’’

 

Sridhar Vembu of Zoho, while also shunning VC money, has this to say:”When you take external funding, you lose your freedom….’’ In fact, Sanjeev Bikhchandani of Info Edge shares similar views on access to easy money: “Run a frugal business; if you have too much money sloshing around, you get into bad habits.’’ And caught in the game of skill versus game of chance battle, Harsh Jain of Dream11 recalls his famous Rs 2 crore loan from his father (a prominent businessman) to start a business and how he was left with only Rs 1.5 lakh within two weeks. When he went back to his father for another Rs 8 crore, he got it with ample help from his mother. About five years after this, things started moving at Dream11 and it was time for funding. “Our investors were truly hands on… They spent time with us and guided us — particularly Vani [Kola].” Harsh Jain is quoted in the book as saying, “You must build a lifelong business. What we call dhandha in our Marwari business families.”       

 

The writer draws similarities between the four unicorns while underlining the importance of being profitable. At a time when quick commerce is the flavour of the season, with many unicorns and would-be unicorns in the race to out-do each other in making superfast deliveries, The Earnicorns  could be a useful reference point.