The brilliant R&D project: Importance of understanding business, not just innovation

Angelbhai huffed and puffed his way up the steps to the conference room. Actually, that’s not quite correct – he huffed and puffed and wheezed alternately. You see, Angelbhai had asthma, and the pollution levels in Delhi made it a lot worse.

Of course, the fact that he was a sprightly 98 kgs, and had a yard and a half around his equator, did nothing to help. Perspiring freely by now, Angelbhai eased himself into his chair, and waited for the pitch session to start.

This time, it was two young engineers making a pitch to the angel investors seated around the table. “Sir, we have developed a low-cost air purifier. Around 75 percent cheaper than the ones available in the market today.”

Angelbhai sat bolt upright. Even the wheezing stopped for a moment. And you could see all the angel investors around the table listening spellbound. “Low-cost air purifier?” “My God, that’s brilliant,” “Looking at the levels of air pollution in our cities, this could cause a revolution,” were some of the thoughts around the table. But then the founders were speaking again, “We have set up a demo in this corner. As you can see the AQI levels are 430 right now – we’ll check the readings in fifteen minutes, at the end of our presentation.”

And so the presentation went on. Some of the angels sat listening, while others, of course, walked up to the purifier every few minutes. They just had to check the readings, you see. Of course, the readings did not disappoint them. 390, 345, 300, 285, they kept going down steadily. And the level of fascination in the room kept rising in complete synchronism with the readings. This was a blockbuster. Yes, this was the next big thing. Already the angel around the table started dreaming of the crores they were going to make through this investment…

Which made eminent sense, and the angels nodded. Finally, keeping their excitement in check with some difficulty, they said, “OK, you seem to be onto a good opportunity. But, we still need a month to study your business in more detail. Just remember, you must appoint your distributors fast. Remember, your design can be copied, and speed is absolutely vital.”

Saying which, two of the angels were appointed deal leads — they would spend more time with the founders — and everyone trooped out with barely suppressed excitement. After all those me-too businesses, this was the real thing. This was the opportunity that could catapult them into the big league.

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One month passed, and the angels were back in the same conference room. The deal leads had unanimously given their go-ahead. Even Angelbhai’s wheezing was better. In fact, everything around the table smelt of excitement. But hold on.

But there was no applause. Instead, there was stunned silence in the room. And you could hear Angelbhai wheezing once again. “What about the distributors you were to appoint?”

“Yes, sir. The moment we have this second product, we will appoint them,” was the somewhat innocent response.

The angels took a deep breath. Cheque books and pens went back into their respective pockets. One of the angels put it succinctly, “What a brilliant product. But these guys have no clue about how to run a business. They have fallen in love with their product. This is now an R&D project, not a business.”

Saying which, the angels trooped out to pick up their coffee. Disappointed, no doubt. Investments could wait.

Over coffee, Angelbhai moved his bulk over to where the miserable founders were fingering their cups. “Look guys, you have a great product. But unfortunately, you don’t seem to have too much business sense. Developing a product is only one part of the story. Marketing it — and that too, rapidly — is equally important, if not more. I suggest you try and get a co-founder who understands business, and can take your product to market. If you can find such a person, come back to us, and we’ll evaluate your business again.”

By the way, you should have heard the angels gathered in the corner of the room. One of them was speaking, “Didn’t I tell you? In an early-stage startup, the team of founders is more important than the business itself. A great founder can turn around an average business. But an average founder will make a mess of even a great business. Look at these guys.” Saying which, he shook his head sadly at his cup.

And with that, they all drained their respective cups of coffee and trooped out. The pitch session was over.