'Meesho' venture building journey, along with insights from Vidit and Sanjeev, founders of 'Meesho'

In this section we summarize the key lessons from Meesho's entrepreneurial journey, including perspectives from the founders themselves.

Key Learnings from Meesho's Venture Building Journey

Meesho's journey exemplifies several crucial aspects of venture building:

• Iterative and Agile Process: Venture building is a highly dynamic and iterative process, far from linear. Entrepreneurs must be agile and continuously responsive to customer feedback. Meesho's founders, Vidit and Sanjeev, demonstrated this by making multiple, rapid pivots in a short period when their solutions weren't working.
• Problem Identification: It's vital to identify a deep and real problem that affects a significant number of people, not just a perceived one. The challenges of truly finding such a problem are significant.
• Product-Market Fit (PMF) vs. Profitability: Achieving PMF is an important milestone indicating market promise and willingness to pay, but it does not mean the company is profitable. The path to profitability is a long one, requiring continuous refinement of the product and business model.
• Focus on Value Metrics: It's essential to distinguish between "vanity metrics" (impressive but not fundamentally meaningful, like high website visits if most users leave) and "value metrics" (which reflect actual value creation, like retention rate, customer activation, and referrals). Tracking value metrics provides clear insights into what is working and what isn't, enabling timely pivots.
• The Venture Building Journey Milestones: The journey progresses through:
  • Problem-Solution Fit: A conceptual phase where a real problem and its solution fit on paper.
  • Product-Market Fit: Having a real product/solution that is continuously improving and demonstrating strong market demand.
  • Business Model Fit: Moving towards a stable and robust product with a clear path to profitability.

Insights from Vidit & Sanjeev, Founders of Meesho

The founders of Meesho provide candid reflections on their journey, offering profound insights for aspiring entrepreneurs:

• Pivoting Based on Data:
  • First Pivot (Fashnear to Meesho 1.0): This pivot was easy because adoption and retention numbers for Fashnear were "extremely bad," making it clear that the product wasn't working. They measured PMF internally by looking at user activation and retention.
  • Second Pivot (Meesho 1.0 to 2.0): This was more complex as Meesho 1.0 had "okay" retention, not as bad as Fashnear. They handled this by running the new product (Meesho 2.0) in parallel for about six months. Once Meesho 2.0 showed "amazing adoption, amazing retention," they shut down the first app. This strategy allowed them to validate the new product's success before fully committing resources.
• Avoiding Sunk Cost Fallacy: Entrepreneurs often fall prey to the sunk cost fallacy, being reluctant to abandon a strategy due to past investments of time, effort, resources, and emotion. Meesho's founders emphasize the importance of being "dispassionate" and relying on value metrics (like retention rate) to objectively determine if a venture is working. If value metrics are not favorable, it's time to pivot, regardless of past investment.
• The Corridor Principle: Taking action opens up new opportunities and pathways that were previously unseen. Meesho's journey exemplifies this; each pivot, even if initially suboptimal, led to new learnings and revealed new problems and customer segments (e.g., discovering small retailers, then women micro-entrepreneurs) that would not have been apparent otherwise. "Action trumps all evaluation."
• Staying Connected to the Customer:
  • Founders emphasize never losing touch with customers. While initial customer interviews are crucial, maintaining customer connection must be integrated into the organization's culture as it grows.
  • For products not built for the founders themselves (e.g., Meesho for homemakers from smaller towns), deep immersion and observation are essential to understand nuanced user problems and motivations beyond just financial gain (e.g., professional identity, self-esteem, community respect). Data helps validate assumptions, but insights for new hypotheses come from talking to users.
  • They made customer calls mandatory even for engineers, fostering empathy and enabling the team to build a better, simpler user experience for their target demographic (e.g., optimizing image sizes for low bandwidth, simplifying UI).
• Understanding the Business Type and Funding:
  • Not every venture needs to become a large, VC-funded "unicorn." Many profitable businesses operate on a smaller scale.
  • VCs seek high (100x-500x) returns, making them suitable only for businesses with very large market potential. Entrepreneurs should be self-aware about the type of business they are building. Trying to force a niche business into a VC-funded, high-growth model often leads to internal pressure and poor outcomes.
  • Scaling before achieving product-market fit (PMF) is a significant risk. Access to early capital can lead to premature scaling, making it difficult to pivot later when problems are discovered.
  • Meesho's initial lack of capital was a "blessing in disguise," forcing them to be "intellectually honest" about what was working and to be financially disciplined, building a strong culture.
• Importance of Quick Iteration: In the pre-product-market fit phase, the ability to iterate quickly, implement solutions, and learn rapidly from the market is paramount, even more so than tech stack or code quality.
• Hiring Top Talent and Culture:
  • Hiring high-quality people from the outset is crucial, as early hires set the tone for the company's culture and future talent pool. They advocate hiring people better than oneself.
  • Building an entrepreneurial mindset throughout the organization and giving employees freedom to operate (a decentralized structure) allows for continuous innovation and value addition to customers. This means trusting employees, especially ex-entrepreneurs, to take ownership and make decisions.
• Continuous Entrepreneurship: The fast-changing business environment demands that even mature firms remain continuously entrepreneurial and innovative to survive disruption. This requires hiring and empowering individuals with an entrepreneurial mindset throughout the company.
• Intellectual Honesty: A critical takeaway is the need for intellectual honesty as an entrepreneur. Despite external pressures from VCs or others, entrepreneurs must rely on their direct access to ground reality and data to make honest assessments about PMF and readiness to scale.