RED to GREEN – Sports365’s journey towards Profitability

Circa late 2016, we (the leadership team at Sports365) started thinking about the idea of path towards profitability. Back then, Sports365 was a 3+ years old start-up and we were hovering around USD 6-7M top-line mark having raised USD 2M cumulatively over previous 18 months. We weren’t really burning too much money, but we did not have a big war chest either. Further, 2016 was a brutal period for start-ups in India with the funding tap running dry and down-rounds for the ones who got some money. Sports was a typical and small (still is) niche in the overall eco-system so it was even more challenging for us to raise funds.

After a lot of deliberations, we took the call. We set-up a longish glide path toward profitability. While unit economics was always a critical parameter for us since the onset, we decided to bring it to the top of the priority list – above Growth to be precise! An entrepreneur would know that this is easier said than done!

Here is how it panned out for us:

a)      First, we freed ourselves from the burden of fund raising. We ran this past our key investors and, thankfully, all of them understood and came on-board.

b)     Second, we decided to spend disproportionate time and effort on existing business areas which were making money (in real sense). This meant we de-prioritized a few existing business areas where we were losing money, no matter how deeply attached we were to them.

c)      Third, we set ourselves up for a set of hard calls. Every new initiative was now to be looked at through the prism of profitability. The mantra was – if an initiative did not help us achieve profitability, it wasn’t worth doing.  Every cost area was to be looked at differently – the objective being to find ways to do things more efficiently instead of just blindly cutting costs.

d)     And finally, the execution. Every month thereafter, we executed hard calls, however painful they may be. We let go of a few lucrative top-line building opportunities. With heavy heart, we saw some existing business area stagnate/de-grow. The hardest calls were around people and that we pushed back as far as we could. When the time came, our principle was to be fair and honest.

6 months into this effort (early 2017) and we still weren’t sure if what we were doing was the right thing. Meanwhile, the funding scenario started becoming better. So, we had to convince ourselves further about the glide path and whether we should continue the same. We decided to stay on course (in hindsight, this turned out to be one of the business decisions for us).

Over next few months we started witnessing the real impact of the hard calls. This encouraged us to do more. The more we did, better the impact was.

We closed FY 2017-18 in the green – a sliver of light at the end of the dark tunnel, if I may say so. The audited numbers were validation of the glide path we took more than a year back.

But, we are still only half way through the original glide path which means this is no time to stop and celebrate. Just like the good old test cricket, we still have a tricky second inning ahead of us. We must keep our heads down, we must tough it out session by session. That’s the only way to win a ‘test’ match and we are on it!