Startups and profitability: sticking to the basics.

Byline: Mutaher Khan

It's a risky business, the world of startups. Steep rises and, if things don't go right, steeper falls.

Getting in the rat race to raise more money and spending it aggressively on customer acquisition/retention and scaling the team to manage that until your last penny runs out. Sounds like the textbook case of a perfectly competitive market from Microeconomics 101, except for maybe one thing: they don't break even and, hence, can't be considered efficient per se.

This is how most of our favourite startups scaled up, be it Airbnb, Uber or Paytm from the neighbouring country. All over the world, the rise of consumer startups has come at the cost of investor money: the more you have, the higher the chances of success.

The financiers bet millions of dollars on ideas and give the founders the freedom to not be preoccupied with such trivial matters like sustainability.

While B2C startups may churn out valuations worth billions of dollars based on their top lines, B2Bs can take up to a decade to go for their Series A financing

But the problem with that is eventually they run out of money, or patience.

So what happens then? Well, those who don't adapt accordingly either fall into oblivion or divest, while some lucky ones get bailouts bigger than what the International Monetary Fund offered us.

But away from this world of glamour lies another batch of startups, maybe not as sensational or popular. However, what they offer is perhaps even more exceptional: sustainable business (or at least the promise of it). Enter the world of business-to-business companies that is relatively obscure and doesn't usually feature the headlines for raising heavy sums of money.

Unlike consumer startups that have to spend aggressively on promotion, sometimes by signing up celebrities or putting posters on the billboards, B2B companies stay away from this extravagance.

There is a stark difference between their valuations as well. Where B2C startups are churning out billions of dollars of valuations, based on the top line, and quickly progress to that unicorn status, B2Bs can take even up to a decade to go for the Series A funding.

Sure, the idea of disrupting a market of hundreds of millions does have a ring to it, which is why many embark on its pursuit. But many a time, the sounder approach is to just stick to the basics: build a solid product, grow organically and sustainably and, most importantly, go for that good, old profitability.

While...