ST15 | Darpan Seth On How To Exit From Your Startup

What do you think about when you hear the words, serial entrepreneur? Do you imagine a startup founder raising money growing fast, and then making an exit, and then doing it all over again? But what if I told you that people do this with bootstrap ventures as well, perhaps even more often than with startups?

Discussion  Topics: Darpan Seth on How to Exit from Your Startup

• Getting started in the logistic space
• Getting first few clients and the power of referrals
• Why Exit or Grow the bootstrap business
• Challenges and Issues on the way to success
• Learnings from challenges and exit

Transcript: Darpan Seth on How to Exit from Your Startup

Amit: Welcome to another episode of the ShopTok podcast. Today, we are talking to Darpan Seth, founder of Nextuple, which is his second business after a successful exit with his first one. We are going to understand from him his learnings from the first exit, and how he’s approaching business this time around. So Darpan, thank you so much for joining us today. Before we start, would you like to introduce yourself, and maybe share a little bit about what your business is all about?

Darpan Seth: Thank you, Amit, for having me. A little bit about me, I’m a second-time entrepreneur in the Omni channel fulfillment space. My first company was a professional services firm in the same space, that company was Bootstrap and then acquired by the Publicis Sapient Group, in 2015. Late 2017, is when we started Nextuple. And we are on a mission to unleash the power of fulfillment networks, in particular stores in order to help our customers get faster fulfillment and lower costs. And also send fewer packages out to customers.

Now you might say that, given the pandemic, we couldn’t have picked a better time, we are four years in the making and growing 100% year on year, we’ve got some fantastic customers and a team that I’m super proud about are really looking forward to what the next phase of our journey has in store for us.

Amit: Yeah. And by the way Darpan, first of all, congratulations on your prior exit. And also on 100% growth year on year. And that is also for mostly bootstrapped businesses. So maybe help us understand how one gets started or how you get started in the logistics space?

Darpan Seth: Yeah, sure. So I started off in the supply chain execution space, way back in late 2000. I joined a company called Yantra. And that company pioneered a set of applications called order management, and it has since become the de facto standard in the industry. It’s called distributed order management and really helps initial dot com businesses, in helping fulfill their orders.

And then subsequently retailers started adopting order management systems in order to really service their customers with the inventory that they had placed across the country. And so, with my team members, I became well-versed in the technologies and the business processes around order fulfillment.

And so, we’ve sort of stayed in the same space. And when I first started out, I almost fell into entrepreneurship by default. I wasn’t a startup that didn’t do as well. And found myself without a job. And that’s when I decided to start out on my own.

Amit: Okay, almost being pushed into entrepreneurship or forced into it. So how did you get your first few clients? Like, when you decided to start out on your own I’m sure, it must have been an uncertain feeling at that time, at least the first time around, for sure.

Darpan Seth: It was definitely nerve-racking Amit. It’s very challenging to find yourself without a job, you start to question your own abilities. But then I sort of drew back into who I was, and I always wanted to do something of my own. And when this opportunity sort of presented itself to say, hey, you can go out there and look for another job or maybe start off on your own, I said why not.

I actually had spent some time in a startup. So I saw that it wasn’t that hard to do what needed to be done, and all I really needed was one customer. So I called my previous client and told him, Hey, I happen to be on the market, do you have a contracting gig for me? I’d love to take something on and he said, for sure and that’s how I got started.

Amit: I love how you describe a forced departure as an opportunity. But indeed it is. And I’ve heard this before from others as well, where how they got started into entrepreneurship was through a service or a consulting opportunity, and usually with some network that they have built in the past. So this seems like a pretty good formula. So from that one client onwards, how did you grow that business, or even now with Nextuple, how do you get your first few clients going from just one?

Darpan Seth: I think the number one thing is, when you get a customer, and you make a promise to them, you got to deliver on it, right? And so I firmly believe in setting low expectations and then exceeding them. And when you do that consistently, over time, it’s not very difficult to find, follow-on work. And that’s sort of the formula that I’ve applied in my career, which is doing the best you can for the customer, make them look good, and add value to their business. And if you do that at a price point that they don’t mind paying, you know, there’s always more work to be done.

Amit: So, since you mentioned price, especially I guess, for consulting, but even for a business, which is trying to price its offering, how does one, or how should one, think about pricing in the early stages, when you don’t have credibility, you don’t have case studies or testimonials or anything?

Darpan Seth: I think that’s where knowing the space that you’re getting into is important. So if you’re starting something brand new, with no idea of what the pricing should be, then you’re right, you know, it’s going to be rather challenging to figure out how you price it or if is there even value in what you’re doing. And so, there are times when you go to a customer with a new product or a new service, and you got to be willing to give it away for free if you have to, in order to get the trial.

And once you have the trial, then you try to say, okay, how much value did I deliver from it, and therefore figure out the price point that the next customer might be willing to pay. So it’s really a little bit of experimentation that can help you figure out what’s fair value. And then obviously, there’s competitive intelligence, right, as it says, is there somebody else out there that’s offering in similar and how much are they offering? If you can collect that information, then you can use that to inform how you would like to price your offering.

Amit: Okay. And then you said that you grew the business, you know, you offered the best possible service that you could to one customer, and then you grew the business from there. So what’s that through referrals?

Darpan Seth: All through referrals. In fact, in my previous business, we had no sales team, in fact, even in Nextuple, in our current business, we do not have anybody in a sales and marketing role today.

Amit: Wow. Okay. I did not expect to hear that about any business. But that’s impressive. I mean, if you can create virality, which is effectively what you’re doing around a B2B business, that is insane. So how does one get this kind of referral? Or create this level of virality?

Darpan Seth: I think the underlying premise is building trust. When you work with customers, when you work with partners, when you work with employees, how do you create a genuine interaction, where you are interested in providing that value to each stakeholder that you sort of run into, you know, in the service industry, they call it the moment of truth, and so, you’re forever on stage, you know, with each interaction that you have, if you try and do the right thing, by the customer, by your people, by your partners, then I think that virtuous cycle, sort of helps you build on one thing after the other and allows you to build some scale and momentum as you go.

Amit: Right. Do you also sort of help that process along because people will not naturally, I guess, refer you to other people, especially, because I’m assuming you work in the retail industry? So I guess retailers compete with each other in that sense. So how do you encourage them or how do you facilitate this whole virality?

Darpan Seth: Yeah, so some of this is a matter of time as well Amit. What I have found in my career is that, when you spent 20 years in one industry, you worked with a few customers to begin with. In those 20 years, those 20 customers or 20 people that you’ve worked with have grown within their organisations, and they have moved around.

So, if you’ve spent time building that trust and relationships when they move around, they take you with them. So it’s not necessarily just hey, you know, I call someone and say, please give me a referral. And that’s how I get my business, it is just by virtue of time spent in the space, in the industry, cultivating your expertise, cultivating your network, and then naturally, those people have risen in the ranks over the years, and gotten into more decision making roles.

And so what I find now, you know, I’m benefiting from a lot of the hard work that I put in with my previous venture because the folks that I’ve worked with back then are now Senior Executives, and many of the clients that we work with now, and are willing to take that chance with us a lot easier than with someone that they just didn’t know anything about.

Amit: I guess this is why maybe people say second-time entrepreneurs or second-time entrepreneurship is easier. And has that been your experience as well?

Darpan Seth: I think it’s a trade-off, right, first time around, you are hungrier, you probably are younger, and therefore you have a lot of drive and energy and desperation, if you may. So I think those things work really well if you want to be an entrepreneur.

The second time round, many of those things may not be at that same level, and therefore, that’s the disadvantage of getting into, you know, do you want to start back at base camp. And do you have the motivation? Or you’re not doing it, why because a lot of people consider it sexy to do a second venture, and many people actually fail at second and third ventures, because they might get complacent, they might not come up with the relevant offering for the time’s, they might not be hungry enough, right, for all of those reasons.

So, I think in many ways, it’s easier, because you don’t make the same mistakes, hopefully not. And in other ways, it is harder, because the expectations of people around you are also high.

Amit: I think you mentioned earlier that your first business actually ended up in a successful exit. And it’s not often that you learn from people who have exited a bootstrap business. So tell me a little bit about how that experience was, why did you choose to exit versus growing the business? And then what happened subsequently post that?

Darpan Seth: Sure. So with the previous business, as I said, we had very little in terms of resources to start with, and so things that we had scavenged along the way. It was really built it up in bits and pieces, you know, one client at a time, one new team member at a time, there’s a lot of perspiration that went into creating the asset, if you may.

So we didn’t have proper resources, and therefore, we had to complement that with a lot of hard work. And second, I think, we worked very hard to create a culture of inclusiveness and bonding in the team, because we couldn’t offer big paycheques to people, and therefore, we had to do something different in order to keep them around with us and make them feel happier and engaged.

And so, what we couldn’t solve with money, we substituted with love for team members. So it was rather challenging to build up a company like that. And, over time, what happened was, as we grew in scale, we started encountering more competition from the bigger guys, and they had a wider range of offerings, they had more significant relationships with executives, in the clients that we were working with, you know, they came in saying they could do it all.

Whereas we specialise in a certain niche. So it was becoming harder to compete with the bigger guys and therefore, we started to question ourselves in terms of what do we need to do to get to the next level? And the answer for that was we needed more investment in newer areas, newer service areas, which meant we had to substantially grow our teams in order to be able to take on things that we hadn’t been doing so far.

It was also, you know, in an area where we did not have as much expertise. And so, there came a point where we simply had to make a choice, like, do we continue to be a small business and turn it into a lifestyle business? Or do we want to continue growing and maybe augment and become a part of a bigger crew where those things naturally exist?

So the complementary services offering skill sets are already part of the new setup. And you basically have a path to continue to thrive in a different environment. And so the latter is what we took, as one way to bank the value of what we had created for ourselves and for our team members. And second, really to find a good home for the business to continue to grow in.

Amit: Right. So essentially, the reason you exited is because the business had hit some sort of a step. And then you had to take a very big step to continue to compete with the next tranche of competitors. And it didn’t seem like that was something that you all could afford or manage, or it was just too much at the time.

So instead, you just took the value that had been created. And maybe this is a lesson also, for those who are listening to this, which is, if you are bootstrapping, you can grow up to a point. But then after that, there will be a step change moment of decision. And potentially, there’ll be another step change, again, maybe a few years down the road. And that’s how you just keep going.

Darpan Seth: Correct. And I think being able to make those transitions across those inflection points, if you may, is what determines success or failure. And it really depends. To me, it boiled down to one thing, really, which was access to capital.

Because if you have the capital, then you can make that inflection point happen. You have the ability to invest in those newer capabilities, newer practices, or newer products, if you may, that allow you to get to that next stage. But if you don’t have that access to capital, then it becomes rather challenging to navigate that traverse.

Amit: Right. So this was about prior business, and then you naturally flowed into Nextuple, which is what you’re running right now. So with Nextuple, because it’s an operation, heavy product, heavy kind of business. Is this something that you were also able to start small, or did you have to actually build out a lot of infrastructure before you got going?

Darpan Seth: We actually started very small. So it was just me and one of my co-founders, Lakshman, we came out of the previous entity, and we just got started pretty much the same way I had started my previous business, which was consulting with a client. And that’s how we got started.

Amit: So this business also began with consulting.

Darpan Seth: It did and it still continues to be a big part of what we do today.

Amit: Okay. So I think this makes sense for a lot of starting entrepreneurs, which is to see whether you can begin with the service and then even if you have a product vision, like sort of Morphett on the way because that, I suppose reduces the risk of what you’re trying to achieve.

Darpan Seth: So different people will tell you that that’s not a good strategy. So the purists will tell you to decide upfront whether you’re building a services business or a product business and do one because it’s very rare for a services business to actually be able to transform and build products successfully. And the reason being that services businesses are really, you know, the KPIs on success, are all about utilisation, bill rates, all of that stuff.

So investment as a KPI fund upon, right, because that is bench time, but you can’t build the product that way, because you can’t build the product in your free time. Then you’re not being true to your product strategy. And that’s why a lot of service companies actually fail miserably at building products.

So, in our case, we had to make a conscious choice to have that investment be a part of our philosophy, and really earmark the resources needed to be able to build a product, because we knew coming in that building a product is not something that you can do in a day or two.

Amit: Right. So you already knew that you were going to be a product business service was just a way to ease yourself into it. But you didn’t have to do a transformation in thinking because you are always going to be a product business.

Darpan Seth: That’s right. If I can sum it up, I would say, the way we operate is different from a pure product company, and a pure service company, in the sense that our philosophy is “use services to learn, and use products to earn”.

Amit: That’s a really good insight, also a very good quotable quote by the way Darpan, you should use that in various places.

Darpan Seth: I tell you this is not my own, it’s from another successful entrepreneur that I’ve had the good fortune of having as an advisor over the years, he’s built many, many companies and exited them. And when I met him one of the times, you know, this is what he shared with me in terms of wisdom, and it’s sort of stuck with me.

Amit: Yeah, it’s a really good way of thinking actually, and makes a lot of sense. So Darpan, you run two businesses, one you’ve successfully exited, so anybody would consider that like a massive win. And the second one, also, you’ve been running for four years growing so fast.

So all this sounds like a fairy tale, at least for someone like me, who had one failed business and is now trying to do something useful with the second one. So did you have challenges on the way? Or what were some of the issues that you had to overcome to make all of this success actually happen?

Darpan Seth: That’s a great question, Amit. You know, no business is without challenges. Every startup sort of runs into its own unique set of challenges. I think one of the most common problems that people run into is issues between the founders. Because it’s a hard thing you’re trying to accomplish in the first place.

You’re trying to create a business where none existed before. And therefore, it’s a little bit like marriage, it’s a lot of work, it takes trust, it takes both partners sort of pulling their weight, and doing it consistently over many, many, many years for a marriage to work.

So, a startup, where there is more than one person involved as the founding team, that becomes crucial because you could have disagreements over vision, strategy, execution, money, direction, pricing, you’re going to have disagreements about pretty much anything to do with the business, it’s how you navigate those differences, how you can agree to disagree in many instances.

And I think, above all, how you can continue to keep that trust and build upon it. Because sometimes you might be separated by time, distance, or geography, right, if you have co-founders in different geographies, for example, it becomes even more difficult to stay on the same page, and that was one of the issues I ran into in my previous business where there was a falling apart between founders, and it came to a point where the business almost shut down, and it would have really impacted pretty much the entire team. And so it was incredibly challenging to sort of overcome that.

Amit: Right. To take your marriage analogy further, you are trying to run a long-distance relationship, which is definitely harder. So one thing that people should watch out for is finding the right founder and then investing the time to make that relationship work so that you’re both essentially moving towards the same direction, and so on. And I think what you mentioned to me earlier was, because you’re working with many of the same people, you have that relationship already built out.

Darpan Seth: Exactly right. And I think that’s what we took away from the previous business was not just the lessons learned in terms of how do you identify and run a business, how do you serve customers, how do you build a team, but really, about being comfortable around a group of people that you know you can just rely on.

Amit: So, what are some of the other things, other challenges that you’ve learned from?

Darpan Seth: I think, in a high-growth business Amit, every three to six months, you end up becoming a different company altogether, recognizing that change, and understanding what you need to do differently at each of those points. So, one is that after a few years, you hit an inflection point, which is the major change in strategy, direction, and execution.

But along the way, there are so many little turns and pitfalls and things that can go wrong, that you have to work very hard at making sure that you keep your eye on the prize or the vision, but at the same time, take care of, you know, the day to day, and make sure that you don’t fall into a pit, you know, fracture a limb, keep notching up your wins, so get at least one win a week.

I call that the winner of the week, or the wow factor. And if you have a lot of wow factors, and you keep doing that week after week after week, then at the end of 52 weeks, that’s 52 wins that you did not have the previous year. And it just adds on. And if there is, you know, 52 of you notching up those 52 wins week on week, then that’s when you build the scale and the momentum with the team.

So the more of you that are notching up those wins, it basically compounds very, very rapidly. So growing 100% year on year is not hard at all, if you have the right team, and each of them is getting you those wins.

Amit: Darpan, this is a really tangible way of looking at it because the quote that one often hears is got 1% better every week, and that will compound over 52 weeks, and you will be whatever, so many x better than you were at the start. But 1% better is very difficult to tell what that is. But one win a week Yes, certainly everybody can recognize what a win is.

Darpan Seth: Easily, right. So in the context of business, it could be a new prospect that you identified. It could be a partner conversation you had that turned into a meaningful relationship. It could be a new team member that you hired. It could be a certain expense that you were able to reduce. My philosophy is if you watch the pennies, the dollars take care of themselves.

Amit: Okay. Oh, you are full of quotes Darpan.

Darpan Seth: I think every entrepreneur that you talk to Amit, I’m sure yourself too, it’s like finding a method to the madness. And we have our own way of finding that method. You talk to many entrepreneurs, right? I’m sure they’ll give you similar-sounding things, but vastly different based on their personal experience.

Amit: Yeah. And this is why I really like having these conversations because the tactics in themselves could fill a book. Like, if you just add it all up it’s a really nice set of things that people have figured out without money. I mean, hardly anybody has ever mentioned to me that, Oh, you know, I just spent a lot of money on this. And it worked out.

Darpan Seth: That’s true and I think also understand what each of us is good at. So, it’s like being an athlete, but recognizing what sport you want to play. It’s vastly different. Someone might be great at running marathons, somebody else might be great at decathlon, and the two athletes can’t really compete in the same sport.

So understanding which sports you’re meant for and then adapting to that, I think makes all the difference. So as an entrepreneur, being able to recognize the external signs, and say, this opportunity is right for me, and the other one is not.

Amit: Yeah, that’s right. Essentially, you play the game, which you’re strongest at, and I guess you will naturally gravitate towards that kind of business. And then your style of doing that business will be in accordance with what you’re good at. If you do something, because it’s the flavour of the season essentially, what you’re saying is, it will eventually not work out.

Now, given that you’ve had an exit, and frankly, before that, also, you had a successful career, you’re presumably financially comfortable. So what keeps you going? Because is it actually possible for a person to be comfortable and yet kind of hungry in business and really have the drive to keep going?

Darpan Seth: That’s a fantastic question. And there are days when I asked myself that, you know, in the sense that, what is the true meaning of life? What is my purpose? Is this what I really want to do? You know, I’ve been through the grind once, why am I doing it again? And then I look around me and see who I’m doing this with?

And I think therein lies the answer, that if you spend time with people that you like being around, and who got your back. And this also means you got to have their back it boils down to the same theme that we were talking of earlier, which is trust, which is, hey, do you enjoy what you do every day, say, 90 days out of 100 you enjoy doing what you do and 100 out of 100 days, you enjoy doing it with people that you enjoy being around. So those 10 days don’t matter as much in the longer run.

The 10 days where you’re feeling low, there’ll be somebody that you can talk to and they’ll pull you out of your misery. So there is some phase where you feel like you just don’t want to do it anymore, it happens. But I find that just being around good people and being able to contribute to their lives meaningfully to me, drives me a tremendous lot. So while we have the energy, we still want to keep trying to contribute.

Amit: Right. So essentially, what you’re saying is for you, it’s about doing it with people that you like doing this with, and that is what is keeping you going. And the fact that you’re obviously doing something and adding some value to the world is the cherry on the cake. Speaking of that, so what’s the future that you’re seeing for your business? You’ve been doing this for, I think, maybe what, three or four years now, and already seeing a lot of success. So where do you go from here?

Darpan Seth: I think we’re just getting started, Amit. Four years have gone by in a flash. And really, you know, what we have spent time on is building a solid foundation. We’ve got a great set of customers that we have built strong ongoing relationships with, and therefore we are very committed to that.

We’ve also built a fantastic core team of people that have joined us from all the good companies in our space. So we have assembled an A-class team, and we have identified for ourselves a complex set of problems that are just waiting to be solved. And we have also figured out, you know, the recipe to solve many of them, and therefore from this point on, it’s all about execution, and really getting our customers to see the value in what we have built.

So, I feel like we have that foundation in place, and we just have to make sure that we capitalise on it and bring the exponential value that we know exists.

Amit: Right, and I think this is quite a noble aim, right? Essentially, you’re trying to get the little guy or the mid-sized guys to be able to compete with the Amazons and Walmart’s and targets, I guess, on the same, at least to level the playing field to some extent, because otherwise, what is eventually going to be left is just these people and none of your mom and pop stores or none of the high street retailers that people will see around them.

Darpan Seth: Yeah, I think nobody has taken a concerted effort to really make them competitive or find ways to make them competitive. And what I find is that the answer has been staring us in the face. You know, a lot of these retailers have a lot of stores, in all the major metro markets.

So if you can crack the nut on how to solve store fulfillment, when it comes to filling online orders, and do it in a way where it’s efficient, it’s scalable, it is faster than just serving customers out of warehouses, then I think that would be something phenomenal for these guys.

Amit: Right. Okay, so, before we close, my last question for you is, what might you have done differently or what advice would you give to aspiring entrepreneurs based on now several years’ journey in this space?

Darpan Seth: Entrepreneurship is like jumping off a cliff with a handkerchief. And it’s a risk. But it’s a risk that an optimist will take. And so, rather than constantly deliberating about starting on that path, or waiting for the right opportunity, when you can get started, you know, it’s not something you can do part-time.

So if you want to do entrepreneurship, you have to jump on both feet and try it out for a certain period of time, really give it everything you’ve got, and not have any regrets if it doesn’t work. So, try it because if you don’t try it, you’ll never know whether you could have done something with it or not. So, that would be my advice. And then the second part is, to pick the right business for you.

There might be great ideas out there about businesses, but are you going to be the right person to set up a business like that and actually run it? So if you can do those two things, I think anybody can be an entrepreneur.

Amit: Right. That goes back to your earlier point about knowing what kind of an athlete you are and playing that game, versus some game that seems lucrative, but you’re just not suited for.

Darpan Seth: That’s right.

Amit: So Darpan, thank you so much. This was a really enjoyable conversation, and I really appreciate having you here with us on ShopTok. And by the way, if you’re a retailer in the US or maybe you want to check them out, because I’m pretty sure it’s going to enhance your business in this current logistics-hungry world.

So definitely give it a look. And for everyone else listening do follow us, subscribe to us. And if you liked this episode, and I see no reason why you shouldn’t have, this has been a really enjoyable one please give us a five-star rating. And that’s it for today. So Darpan, thank you so much for joining us. We were Darpan and Amit with ShopTok. See you next time.