I am not a frequent reader, or contributor, on Quora, the knowledge platform that is more popular in India than most other markets in which Quora wishes it were popular. But the other day, in one of those digests that Quora periodically sends in order to entice me back on to the site, I came across an interesting question and an even more interesting answer.
Said question read, “I’m 21 years old. I want to start a new business. I have ₹1 lakh. What suggestions do you have to start an innovative business?” The way I read it, he points out that he has age on his side but not too much capital, but he is willing to be as innovative as possible to make the most of that capital.
The most popular answer is by one Rohtash Mehla, who seems to be quite prolific in generating business ideas on Quora. The long-story-cut-short version of his answer is that the wannabe entrepreneur should get into the business of selling T-shirts on marketplaces. Interspersed with photos of T-shirts, he points out how the math is in his favour. The numbers? A T-shirt printing machine costs around ₹40,000. The bureaucratic costs of setting oneself up as a business is at around ₹5000, he says. The raw material of acquiring T-shirts on which to print is roughly ₹100. Having previously bought T-shirts from Tiruppur as he suggests, I think he is either exaggerating here, or compromising a little too much on quality. These can be listed on marketplaces like Flipkart and Amazon at around ₹599 or ₹699 a pop, thus dangling a very large carrot of margins for the 21-year-old upstart.
Now, there is nothing wrong with Mr Mehla’s suggestion, especially given how the numbers stack up in his favour. It is a decent ‘dandha’, to use a colloquial word. But it is not what I would define as a startup. Given that there is no entry barrier to this business, and there will be many players in the same market, and whether those attractive margins are realised, boils down entirely to how imaginative your prints are, that they can sell a lot. And you are down entirely to creativity here, without being able to lean on already popular stuff such as superheroes or sports clubs, because you will then quickly see your margins disappear amidst the licensing costs. So, however big the margins may be, succeeding with this idea has chances worse than what comes with the roll of a die.
Worth noting down: those margins are not a given. Either the marketplaces themselves (as in the case of Amazon Basics) or those on the supply side (nothing stops the Tiruppur businesses getting on to the marketplaces themselves) can very quickly eat into those margins because they can afford to.
Also, having your entire business model dependent on the continued existence of a marketplace puts a big limit on how much it can scale. So if I were the 21-year-old with ₹1 lakh in hand, I would probably skip Mr Mehla’s advice and continue looking for a more genuine problem to solve.
The author heads product at a mid-sized startup in the real estate space
