Building vs Scaling

Monuments vs mountains.

The venture capital ecosystem has its roots in the Silicon Valley. Which is to say, VC was built for tech. This has far reaching implications for founders of today. Especially FMCG (Fast Moving Consumer Goods - like soaps and chocolates ) founders.

Venture capital is built on the power law. You invest in 100 startups. 98 fail. Two become Apple and AirBnB and return 10X of your fund.

Which tells you that the failure rate in tech businesses is insane. 90%+. And that’s because usually tech (especially B2C), is a winner take all game. There is one AirBnB. One Amazon. One Facebook. Biggest exception is India food delivery. There are two players. Two. No third.

In a winner take all game, the winning strategy is a land grab. Spend big and acquire consumers fast. Network effects kick in at scale. Scale begets scale. Everyone wants to be on Instagram because everyone is one Instagram.

This short, not so precise history of VC is what gave birth to the term ‘scaling’. A metaphor that comes from ‘scaling mountains’, I assume.

Maybe VCs imagine tech entrepreneurs as a horde running up a large mountain with a pot of gold at the top. The one (only one) who gets to the peak first, gets the pot. All others must fold and go home and think about what they’ve done.

Over time though, VC expanded outside of tech. And a few decades ago, arrived at the doorstep of FMCG. Businesses selling physical products to end-consumers. One piece at a time.

FMCG and tech couldn’t be more far apart.

There is no cost to downloading an app (memory space is infinite and data costs are near zero). But in FMCG, you have to sell a real ‘thing’, for real money, and it can’t be downloaded into your phone. You have to buy it from a store (which might be in your phone :)).

‘Try fast, fail fast’, the universal tech mantra, doesn’t work in FMCG. If you’re an app, you can ‘ship’ a new feature over the air, see if consumers like it, and delete it if not. All in one day. No friction. No one notices.

But if I try fast and ship a new protein bar flavor that is shit, then firstly, I will ‘fail slow’. That’s to say, that by the time I make it, ship it to my warehouse (which holds 25 days of stock), then ship it to the distributor warehouse (who holds another 15), then ship it to the store (which holds another 20), then you buy it, eat it, spit it out, and then never repeat it, and then a 1000 people like you do the same, before I start seeing it in data -  5 months would have passed.

And oh, once you figure that this brand ships shit, you will never ever spend another 100 bucks trying food from this brand. In that sense, we will first fail slow, and then very fast. Basically, FMCG brands need to be first time right. We don’t get to iterate. Very unlike tech.

But the biggest difference between FMCG and Tech, is that FMCG is not winner take all.

Pick any FMCG category. You’ll find that 80% market share is held by 8-10 brands (atleast). All of which are sizeable, profitable businesses that have figured out how to own a niche.

Even in the most monopolistic FMCG categories like Oral Care, which is dominated by Colgate, there is a Sensodyne that owns the ‘sensitive teeth’ niche. And a Patanjali and Dabur which own the ‘Ayurveda’ niche. And Closeup which competes and owns a decent share of the ‘freshness’ niche.

FMCG is not winner take all. FMCG is not a land grab. FMCG entrepreneurs are  not all running up the same hill. And there is no ‘one’ pot of gold.

What if, instead, we thought of ourselves as ‘building our own monuments’.

You might be building a Taj Mahal. I might be building the Eiffel Tower. And someone else might be building Statue of Liberty. Yes, we compete because consumers have to choose which monument would they like to see today (depending on their life stage, mood, need, what their friends recommend etc). But in their lifetimes, consumers will see many monuments. Some more, some less. There is space for many.

I find that the minute I shift my mindset from scaling mountains to building monuments, it shifts so many things in my head.

First, it stops feeling like a race. I just go to work everyday to put a few more bricks in my Taj.

Second, it reduces pressure on me, and my team, to ‘scale’.

Ofcourse, we need to pick up new skills. When we started, I was laying the foundations with my bare hands. Then I got a great team, and my role became to supervise the brick laying. And to ensure that we were executing to the blueprint. Now, as they transition into the supervisory role, my role evolves into being a resource allocator. I need to decided where the limited quantity of brick and cement goes first.

Sure, different people have different abilities to keep learning. Different intentions too. Maybe some don’t want to become supervisors. Maybe they just want to keep honing their craft. Want to spend time perfecting the carvings on the minaret. While some others want to go wide. Oversee everything from brick-work to artwork. And that’s cool. When you are building, there is space for everyone.

But perhaps the biggest shift that happens when I think Building instead of Scaling, is I get a sense of purpose.

Perhaps this is a good time to mention that I am an existentialist. I believe that life has no inherent meaning. And we humans have no divine purpose or destiny.

That leaves only two choices. Die today (because what’s the point of doing anything). Or find your own meaning, your own purpose, and live it.

Building The Whole Truth is the purpose I chose for myself (or it chose me, rather). And thinking of it as scaling a mountain makes me feel like Sisyphus. The man who was condemned by the gods to roll a stone uphill, only to have it roll down, and do it all over again. For life. Till death.

It’s the definitive existentialist text. A reminder of the pointlessness of life. I don’t need that reminder :)

I’d rather think of TWT as my Taj Mahal. And finish work everyday with a sense of accomplishment. Of progress. Without worrying that someone else is also building the exact same Taj and I need to outrun them.

In an inherently random, meaningless world, this gives me pause. And purpose.

PS: For VCs investing in FMCG business, if you’re thinking “but what about that other guy who is also building a Taj, but bigger”. Don’t worry. In our world, people come see monuments for various reasons. Some for size. Some for beauty.

PPS: That photograph is me in Petra. Those guys scaled a mountain, only to build their monument right into it. And this was 1800 years ago. Insane.